TODAY
• Economic geography
Industrialization & theories of
economic development
© T. M. Whitmore
LAST TIME
• Social Geography
Wealth
Race
Religion
© T. M. Whitmore
Industrialization in the late
19th Century — up through
WWII
• Export Processing Industrialization (a
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follow on from colonial patterns)
Low technology manufacture of basic
consumer goods
Era of WW I; Great Depression;
through WW II
© T. M. Whitmore
Import Substitution
Industrialization (ISI) (1940s —
1970s)
• Legitimized by Argentine economist Raul
Prebish in 1940 and adopted as official
policy by the UN after WWII
© T. M. Whitmore
How ISI works
• Imposed quotas or tariffs to increase
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the price of imported manufactured
goods
Idea is to stimulate local industries
NOT a new idea
© T. M. Whitmore
Consequences of previous
rounds of industrialization
• A legacy of: Colonial; 19th C; and
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especially ISI industrialization
Spatially uneven: largest states benefit
most
Smaller states forced to band together
© T. M. Whitmore
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Assumptions of ISI
Presumes that “under development” is partly
the result of uneven terms of trade between
LA and the more developed Atlantic world
Isolating the country’s economy from the
wider world’s economy will allow it to develop
without the pressures from the Atlantic
World
Attempt to recreate a mini-model of the
economy of more developed states
Strongly involve the state in economic
activities via state enterprises etc.
© T. M. Whitmore
Problems with ISI
• Modern technology & jobs
• Changed imports did not stop them
• Foreign control continued
• Governmental role increased
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Subsidies & control
Inefficient and corrupt industries
© T. M. Whitmore
Impacts of ISI development
• ISI and general growth in 1960s led to
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increased borrowing by LA nations
By 1980s loans became due but growth
anticipated from ISI was not sufficient
Neo-liberal reforms or “Conditionality” as
a plan to work out debt
Higher interest rates, higher cost oil, etc
=> great levels of inflation beginning in
1970s
Inflation => elites took their money out of
LA to US and Europe
© T. M. Whitmore
Growth Pole Industrialization
(1950s-60s)
• Concentrate on key parts of economy
• Develop specific locations
E.g., Arica Chile
Amazonia and NE Brazil
Ciudad Guyana
© T. M. Whitmore
Export Promotion Industrialization
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Due to failures of ISI and need of LA
countries to satisfy banks from whom they
borrowed to do the ISI
Idea was to mimic success of Asian “Tigers”
Based on “neo-classical” economic ideas
Assumes that markets manage best
Thus, open markets best (lower or eliminate
tariffs) (tariffs are usually reciprocal)
Allow transnational corporations
Thus, attempts to create zones of free
trade
© T. M. Whitmore
Export Promotion Industrialization
II
• Main advantage of LA in world economy
(in addition to availability of some raw
materials and agricultural products) for
manufacturing is
Location near USA mkt.
The low cost of labor => laborintensive (assembly) industries
© T. M. Whitmore
Export Promotion Industrialization
III
• Mexico and Brazil initially first in this
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due to their already existing industrial
infrastructure
E.g., auto factories initially designed
for ISI changed to export
This pattern is greatest in the sphere of
small-scale assembly of finished goods
or parts – often in special zones
These are usually referred to as
© T. M. Whitmore
Maquiladora assembly plants
Current industrialization
• Mexico + Brazil ~ ½ of Latin American
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population but > 70% of industrial output
Brazil ~ 1/3 of pop but has ~ ½ industrial
output by itself
Argentina, Peru, Venezuela have ~ 25%
of industrial output in LA
Thus, ALL the rest of LA combined has
less than 10% of all industrial output
© T. M. Whitmore
SUDAN
Ciudad Guyana
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Auto train near Saltillo. Mexico
© T. M. Whitmore
© T. M. Whitmore
Kenworth (18 wheelers) exported FROM Monterey, Mexico to USA
© W.H. Freeman & Co.
© T. M. Whitmore
© T. M. Whitmore
© T. M. Whitmore
© Secretaría de Economía, Mexico
© T. M. Whitmore
© W.H. Freeman & Co.
© Zachary Miles Baddorf. www.baddorf.com
© Amnesty International
© T. M. Whitmore
© T. M. Whitmore
© T. M. Whitmore
© T. M. Whitmore