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Modernization, Dependencia, and Import Substitution Industrialization

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Presentation on theme: "Modernization, Dependencia, and Import Substitution Industrialization"— Presentation transcript:

1 Modernization, Dependencia, and Import Substitution Industrialization

2 100 Years of History Latin American independence movements ( ) relied on a new sense of nativism The revolts were started by the Creole elite Elites appealed to the masses’ identity based on birthplace: American Continuing social, economic, and political inequality would continue unchanged 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 “That everybody belonged, that the benefits of Progress should be shared, and that industrial development should be the priority” The Latin American wars of independence begin around 1808 and end around 1824 with the Battle of Ayacucho

3 Theory and Policy: Overlapping Concepts
Economic Theory: Modernization v. Dependency Economic Policy: Export-led Growth v. Import Substitution Industrialization

4 Modernization Theory 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)

5 Modernization in Brazil
Economic modernization led to mass urban migration in the early 1900s and, in turn, destabilized the rural political oligarchy President Getúlio Vargas ( , 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 ( ): populist president who promises Brazilians 'fifty years of progress in five‘; industrialization progressed quickly, but so did inflation and debt Economic modernization: the creation of banks, railroads, ports, industry, etc shifts the locus of political and economic power deinitively to the cities. July 16, 1934: a new, fascist constitution is enacted (supported by Vargas) Established state-led industrialization aimed at reducing foreign dependency Uses nationalist rhetoric to harness the working class and mediate class disputes

6 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 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

7 Brasília: the High-Modernist City
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”

8 Brasília: the High-Modernist City
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

9 Dependency Theory Underdevelopment in less developed countries is the result of development in the West 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 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

10 Import Substitution Industrialization
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 State-led economic policy ISI policies may be consistent with several types of economic theories: mainly those based on economic nationalism of whatever sort, left of right (see Vargas)

11 Dependency in Brazil 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, While president, Cardoso followed standard neoliberal economic policies

12 ISI in Brazil Timeline 1945-1962 period characterized by intense ISI
: GDP growth averages over 7%, industry growth averages over 9% Imports (esp. fuels and machinery) increased more than exports Large foreign debt : the industrial sector stagnated as a result of adverse macroeconomic conditions : rapid industrial expansion and modernization Import controls regulated through a multiple exchange rate system that prioritized certain goods (fuels and machinery) by treating them with a preferable rate while imports of goods that could be produced domestically faced a higher rate.

13 ISI in Brazil Nationalism: Vargas gained support for ISI policies in the working and middle classes through the explicit use of nationalist rhetoric Development: 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 Amazon: logging, mining, smelting, and industrial agriculture

14 Dependency Theory 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?

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