Latin American Responses Notes

Background

1. The Great Depression (1929–1939) devastated Latin American export economies that depended on raw materials (coffee, sugar, copper, nitrates, beef).
2. With global demand collapsing, export revenues plummeted. Brazil’s coffee prices dropped by over 60%, and Chile’s nitrate exports fell to one-tenth of pre-1929 levels.
3. Foreign investment and credit from the U.S. and Britain dried up, forcing Latin American nations to find domestic solutions.
4. This crisis shifted the region from export-led growth to internal industrialization, marking the rise of Import Substitution Industrialization (ISI) and stronger state intervention in the economy.

Import Substitution Industrialization (ISI)

1. Definition:
   1. Economic strategy aimed at replacing imported manufactured goods with domestic production to achieve self-sufficiency.
2. Mechanism:
   1. Governments raised tariffs, subsidized local industries, and invested in infrastructure (transportation, energy, machinery).
3. Impact:
   1. Encouraged urbanization and the growth of a new industrial working class.
   2. Reduced dependency on foreign imports but created new reliance on imported machinery and technology.
   3. Initially successful in stimulating growth but later limited by small domestic markets and lack of competitiveness.

Social and Economic Policies

1. Economic Role of the State:
   1. Governments took a central role in economic planning and regulation.
   2. State-led public works programs tackled unemployment and stimulated demand (e.g., infrastructure, hydroelectric dams, transportation networks).
2. Social Welfare:
   1. Peronist Argentina: Introduced wage increases, paid holidays, health benefits, and housing programs through the Eva Perón Foundation.
3. Vargas’ Brazil:
   1. Implemented labor codes, minimum wage laws, and workers’ social security (the “Estado Novo” regime institutionalized social rights while limiting political freedoms).
4. Nationalization: