MODERNIZATION,
DEPENDENCIA, AND
IMPORT SUBSTITUTION
INDUSTRIALIZATION
Brazil
100 Years of History
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Latin American independence movements (1808-1824)
relied on a new sense of nativism
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Continuing social, economic, and political inequality would
continue unchanged
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The revolts were started by the Creole elite
Elites appealed to the masses’ identity based on birthplace:
American
The "Progress" movement, popular in the industrializing West,
reached Latin America in the 1850s
Liberals use promises of political and social reforms as well as
economic progress to come to power; largely unfulfilled
The ignored middle and lower classes turn to nationalism
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“That everybody belonged, that the benefits of Progress should
be shared, and that industrial development should be the
priority”
Theory and Policy: Overlapping
Concepts
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Economic Theory: Modernization v. Dependency
Economic Policy: Export-led Growth v. Import
Substitution Industrialization
Modernization Theory
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Modernization is a revolutionary process
Modernization is a complex process
Modernization is a systemic process
Modernization is a global process
Modernization is a lengthy process
Modernization is a phased process
Modernization is a homogenizing process
Modernization is a irreversible process
Modernization is a progressive process
Samuel Huntington. "The Change to Change: Modernization, Development, and Politics" (1971)
Modernization in Brazil
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Economic modernization led to mass urban migration in
the early 1900s and, in turn, destabilized the rural
political oligarchy
President Getúlio Vargas (1930-1945, Liberal
Alliance): Vargas overcame a coup attempt by coffee
elites, marking Brazil’s transition away from a
traditional, rural economy established the modernizing
– and Fascist - Estado Novo dictatorship
Juscelino Kubitschek (1956-61): populist president who
promises Brazilians 'fifty years of progress in five‘;
industrialization progressed quickly, but so did inflation
and debt
Modernization in Brazil
From 1900 to 1980 the average annual rate of GDP growth
was 5.7%, while industry grew by about 7.1% per year
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1930: Vargas Elected
1932: Coffee coup defeated
1934: Fascist constitution adopted
1937: Estado Novo established, Vargas assumes dictatorial powers
1942: Vargas sides with Allied forces in WWII
1945: Military coup overthrows Vargas
1951: Vargas elected to the presidency, again
1954: Facing a military coup, Vargas commits suicide
1956: Kubitschek elected to the presidency
1956: work on Brasília begins
1960: Brasília becomes the national capital
1964: Military coup
Brasília: the High-Modernist City
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Brasília was to be the city of the
future, of a modern Brazil
Planned and developed in 1956,
Brasília became the capital in 1960
“Brasília made no reference to the
habits, traditions, and practices of
Brazil's past or of its great cities”
 functionalist
principles: dispersion and
functional segregation
 “The death of the street”
Brasília: the High-Modernist City
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By1980, 75% of the population of
Brasília lived in settlements that had
never been anticipated, while the
planned city had reached less than
half its projected population of
557,000
Estrutural, a slum near Brasília, is
home to over 20,000 people
The pattern of urban modernization
pushing the poor to the edge of the
city is common
Dependency Theory
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Underdevelopment in less developed countries is the result
of development in the West
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International capitalism has set up a global economic system with
a division of labor that maintains the periphery in a subservient
position relative to the core
Dependent nations develop dual economies
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Modern sector is entirely dependent on the international economic
system – for resources (capital, technology, and materials) and
markets; a “collaborating class” forms
Traditional sector is not, but it is eroded by the activities of the
modern sector
Dependent nations are adversely affected by unequal terms of
trade: they export cheap raw materials and import expensive,
finished, manufactured products; the core relies on this imbalance
for its prosperity, the core must break it if it is to develop
Import Substitution Industrialization
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ISI policies may be consistent with several types of
economic theories, though it is most closely associated
with Dependency Theory
Domestic production of substitutes for imported
commodities
Protectionist barriers to international trade in order to
encourage a domestic market
Government financing for new industrial projects
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State-led economic policy
Dependency in Brazil
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Fernando Henrique Cardoso
After the 1964 military coup
Cardoso went into exile; he returned
in the 1980s
 In the 1970s Cardoso was
addressing the weaknesses of
Dependency Theory: limited
development is possible despite
significant dependence; poor nations
must develop as much as possible
within the global economy.
 President of Brazil, 1995-2000
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While president, Cardoso followed
standard neoliberal economic policies
ISI in Brazil
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Timeline
 1945-1962
period characterized by intense ISI
 1950-1961:
GDP growth averages over 7%, industry
growth averages over 9%
 Imports (esp. fuels and machinery) increased more than
exports
 Large foreign debt
 1962-1967:
the industrial sector stagnated as a result
of adverse macroeconomic conditions
 1968-1973: rapid industrial expansion and
modernization
ISI in Brazil
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Nationalism: Vargas gained support for ISI policies in the
working and middle classes through the explicit use of
nationalist rhetoric
Development:
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gains in industrial work are offset by massive rural to urban
migration and thus un/underemployment and the resulting
lowering of the standard of living in urban areas despite
increasing labor regulations
political conditions deteriorate into Fascism and military
dictatorship in which the working class is included but
subordinated through populist structures
Rural poverty and landlessness increase as farming is mechanized
and the Amazon is opened to industrial development; demands
for land redistribution grow
Dependency Theory
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What role do political forces play in economic
development? To what extent do/can domestic
political circumstances influence the national
economy?
Does dependency theory put too much emphasis on
the power of capitalism to shape the circumstances
of underdeveloped countries?