Background
- The Second World War (1939–1945) reshaped the economies and foreign relations of the Americas.
- The war ended the Great Depression, boosted industrial growth, and expanded diplomatic cooperation within the hemisphere.
- Both the United States and Mexico experienced major economic and diplomatic transformations that influenced their postwar development.
Economic Effects: United States
- Wartime production created full employment and ended the Great Depression.
- The government established agencies such as the War Production Board to coordinate factories and resources.
- U.S. industrial output doubled between 1940 and 1945, turning the country into the “arsenal of democracy.”
- Massive defense spending laid the foundation for the military-industrial complex that dominated the postwar economy.
- Agricultural exports increased to feed Allied nations, and new technologies improved productivity.
- After 1945, the United States emerged as the world’s leading economic power, producing half of global manufacturing output.
Definition
War Production Board
- The War Production Board (WPB) was a U.S. government agency established during World War II to manage and coordinate industrial production for the war effort.
Diplomatic Effects: United States
- Wartime leadership positioned the U.S. at the center of the new liberal world order.
- Played a leading role in founding the United Nations (1945) and promoting international peace and cooperation.
- Strengthened hemispheric ties through the Good Neighbor Policy and Pan-American conferences, improving relations with Latin America.
- Relations with the Soviet Union quickly deteriorated after the war, marking the start of the Cold War.
- The U.S. used its new influence to spread democracy and capitalism while containing communism globally.
Definition
Good Neighbor Policy
- The Good Neighbor Policy was a foreign policy initiative of President Franklin D. Roosevelt (1933-1945) aimed at improving relations between the United States and Latin American countries.
Economic Effects: Mexico
- War demand increased exports of oil, food, and raw materials, helping Mexico recover from the Great Depression.
- Industrialization accelerated under Import Substitution Industrialization (ISI), as imports from Europe and Asia declined.
- The government supported new factories producing textiles, steel, and chemicals.
- The Bracero Program (1942) allowed hundreds of thousands of Mexican workers to labor temporarily in the U.S., sending money home and reducing rural unemployment.
- These trends strengthened Mexico’s middle class and laid the groundwork for long-term industrial growth.
Case study
Import Substitution Industrialization (ISI) during the Second World War
Background
- During the Second World War, trade with Europe and Asia declined because many factories overseas were destroyed or focused on war production.
- Countries in Latin America could no longer rely on importing manufactured goods like textiles, machinery, and cars.
- To fill this gap, governments began producing these goods at home.
- This new approach was called Import Substitution Industrialization (ISI), a strategy to replace imports with domestic production.
How ISI Worked
- Governments raised tariffs (taxes on imports) to protect local industries from foreign competition.
- They gave loans, subsidies, and tax breaks to help local companies grow.
- Public money was invested in factories, steel plants, and power stations.
- Countries built industries that produced everyday items such as clothes, shoes, and household goods.
- As industries expanded, more people moved to cities for work, starting a process of urbanization.
Examples
- Mexico: Created new factories to produce steel, cement, and chemicals; later expanded into car and machinery production.
- Brazil: Under President Getúlio Vargas, the government founded the Companhia Siderúrgica Nacional (National Steel Company) with U.S. support.
- Argentina: Grew its textile and food-processing industries to supply both domestic and regional markets.
Impact
- Helped Latin American countries become less dependent on imports from Europe and the United States.
- Created jobs and expanded the urban middle class.
- Improved infrastructure, including roads, ports, and electricity networks.
- However, many industries still depended on imported machinery and technology, so full independence was not achieved.
- After the war, when global trade resumed, some ISI industries struggled to compete with cheaper foreign products.
Diplomatic Effects: Mexico
- Mexico supported the Allied cause after Axis submarines attacked its oil tankers in 1942.
- Declared war on Germany, Italy, and Japan, becoming one of the few Latin American nations to send air support (the 201st Fighter Squadron).
- Wartime cooperation improved relations with the United States after years of tension over oil nationalization (1938).
- Mexico’s contribution enhanced its international standing and strengthened hemispheric unity.
- After the war, Mexico gained access to U.S. loans and technical assistance, boosting its modernization efforts.
| Category | United States | Mexico |
|---|---|---|
| Economic Effects | The United States gained full employment and ended the Great Depression. It became the world’s leading industrial and financial power and developed strong factories and technology that continued after the war. | Mexico increased exports of oil, food, and raw materials. It developed local factories through Import Substitution Industrialization (ISI), created new jobs, and expanded the middle class. |
| Diplomatic Effects | The United States emerged as a global superpower and a founding member of the United Nations. It took a leading role in shaping world politics and strengthened ties with Latin America through the Good Neighbor Policy. | Mexico improved relations with the United States after joining the Allied side. It gained international respect for its cooperation and air support during the war and became a regional industrial power with growing influence. |
| Overall Significance | The United States dominated global trade and diplomacy after 1945 and set the tone for the Cold War and postwar world order. | Mexico benefited from wartime alliance and U.S. aid, using the war to modernize its economy and strengthen national unity. |
Common Mistake
- Focusing only on the U.S. and ignoring Latin American perspectives.
- Confusing wartime economic growth with postwar reconstruction policies.
- Forgetting that diplomacy in Latin America involved both cooperation and dependency on the U.S.
Theory of Knowledge
- Knowledge and Power: How does economic strength shape diplomatic influence?
- The war showed that control of production and resources determines not only military success but also the ability to shape global order after conflict.
Self review
- Examine the economic and diplomatic effects of the Second World War on two countries of the Americas.
- Assess how far wartime cooperation transformed relations between the United States and Latin America.
- To what extent did the Second World War promote economic modernization in the Americas?
- Evaluate the role of the Second World War in shaping the international status of the United States and Mexico.
