development arose. This theory of Latin American uniqueness inspired the region’s structuralists to jointly reject free trade and Ricardian trade theory, as well as neoclassical laissez-faire economics, in favour of state-fostered ISI. The period of import substitution industrialisation in Latin America ended following the onset of “La Década Perdida” (“The Lost Decade”), leading many economists to conclude that state - fostered ISI had been a mistake. Indeed, given that the implementation of ISI in Latin America compares so unfavourably with the export- orientated industrialisation of the East Asian countries, it would appear at first glance that ISI was an abysmal failure. First glances can often be deceiving however: in truth the effectiveness of ISI in Latin America cannot be judged in black-and- white terms. It is wrong to label ISI a catastrophic failure – as many neoliberals have asserted since – that directly led to the 1982 debt crisis; the debt crisis was largely “a consequence of factors” 176 outside, and outside the control of, Latin America. In fact, ISI was initially successful; in response to the destabilisation of the global financial system caused by the Great Depression and World War Two, governments took advantage of the opportunities afforded in the tacit protection of opportune infant industries at home. Foreign competition was restricted by tariffs and quotas, local investment was encouraged through the use of credit and loans, public-sector spending stimulated domestic demand, and in some countries large state industrial plants were built to help the industrialisation process. From the 1950s to the 1970s, annual growth rates in Latin America hovered between five and six percent 177 – and the economic development of both Brazil and Mexico were hailed a “miracle.” 178 One decade later however, Mexico – one of the so-called “miracles” – would default on its debt and the region of Latin 176 Thomas E. Skidmore, Peter H. Smith and James N. Green, Modern Latin Americ a, 7 th edition (New York: Oxford University Press, 2010), page 369. 177 Skidmore, Smith and Green, Modern Latin America, page 361. 178 Skidmore, Smith and Green, Modern Latin America, page 361.
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