From Import-Substitution Industrialization to Neoliberalism in Latin America - Assignment Example

number 16 March From Import-Substitution Industrialization to Neoliberalism in Latin America There is a great variety of countries in the world and each of them has a specific path of development which is being planned for a long time, and in respect of a number of geographical, economic and social causes, conditions, and prerequisites. Their examples can serve as a visual aid for other countries which start the same way in order to take advantages of the positive experience for the particular case of a particular state or to prevent the characteristic mistakes. In this assignment we are going to consider the peculiarities of the development of Latin American countries under the influence of the policies of Import-Substitution Industrialization and Neoliberalism and their role and impact on the urban geography of the continent. As a matter of fact the nature of economic growth in Latin America that is shown in the postwar period has been laid before the World War II. From the 20s and till the 80’s of the 20th century Latin America has evolved towards state capitalism that manages to industrialize, establish the production of competitive industrial goods and perceive some scientific and technological advances. For in 1929-1933, the US economy is overtaken by the Great depression, the agro-commodity economics of Latin America traditionally focused on the United States find themselves without markets. The crisis in these countries leads to the flourishing of the ideology of import-substituting industrialization type. “Import-substitution industrialization was a dominant economic policy in Latin America during the 1950s, 1960s, and 1970s as a response to dependency and structuralist theories. It represented a shift away from the outward orientation of export promotion, to an inward-looking orientation” (Franko, 615). During this period of time the import of certain goods which are started to be produced within the country decreases. Still imports of other equipment and materials necessary for their production increase. In order to save foreign exchange the government begins to restrict imports of various "secondary" products establishing their production domestically. This again reinforces the trend towards import-substitution and the price for such a policy rises for, firstly, the import of equipment even more goes up, secondly, the production costs growth takes place. As the rapid industrialization can be conducted only being based on the state support, the ideas of active state intervention in the economy become popular in Latin America. It has created a network of state-owned enterprises and whole industries (energy, mining and refining, transportation, engineering) and protected the domestic market from competition of foreign goods through preventive measures, regulated labor relations, introduced social insurance, developed mass education. The socio-economic situation in Latin America deteriorates in the 70s after a sharp rise of oil price, with the exception and only for a short time of the oil-producing countries such as Mexico and Venezuela. To meet the increasing trade deficits and in the hope of growing up the production of goods for export with continuing import-substitution, Latin American countries resort to external borrowings which are not always used efficiently. And already in the early 80s Latin America has experienced a stroke largely contributing to its subsequent transition to neoliberalism. The transition to neoliberalism in Latin America is a reaction to the crisis of the import -substitution industrialization and the General world tendency of the withdrawal of the state from the economy, as well as the implementation of the "Brady plan" (US Treasury Secretary under President Bush) which aim is to alleviate the burden of external debt by replacement of short-term debt on a long-term one, financial stability and the sale of shares of companies in Latin America. It involves the privatization of the public sector. “Neoliberalism is the deregulation and expansion of the market economy, it includes eliminating barriers to trade such as tariffs and government subsidies of national industry, and implementing national policies that favour the needs of business and investment” (Kelly). Neoliberal reforms in Latin America has brought a lot of positive aspects, namely: the economy efficiency and use of all types of resources increases; many benefits and subsidies protected companies from competition are eliminated; the tax system becomes easier and better; the situation in the banking sector is improved; the destructive inflation is suppressed; the volume of foreign trade is growing; the competitiveness of Latin American goods on the world market goes up; Latin America has again become attractive for foreign investments. It’s natural that the policies of both Import-Substitution Industrialization and Neoliberalism have strongly influenced the urban geography of Latin America. Let us see in what way it has occurred. The increase of the national production turnover demands the inflow of labor into the cities - centers of industrialization. This is the main reason of such an issue as the urban growth because there is a mass migration of people from rural to urban settlements within the countries of Latin America. In this respect the urban primacy arises as almost all funds are invested in the development of city industrialization not archaic structure of agricultural production and social relations with the village. One more aftereffect of the mentioned process is the over-urbanization. A city becomes an arena for speculative capital. Its interests take precedence over the needs of the residents. The informal sector (housing and employment) of economy grows. In large cities it accounts for the vast majority of newly emerging working places. This fact alongside with the appearance of secondary cities where working people may live, and squatter settlements or favelas (low-quality housing) in the suburbs where poor people must live is the negative impact of Neoliberalism. In this way the middle class becomes isolated in the closed protected areas. The purpose of this policy is the clearing of space in the city center for the construction of new buildings for the elite there. The only advantage of Neoliberalism is its privatization if it taken in general state scales due to the fact that simple workers have a little positive effect from it. So we can admit that for urban arrays the policies of Import-Substitution Industrialization and Neoliberalism have benefited in the development of city life but with a significant number of negative consequences of the worsening socio-economic climate in the countries. While liberalism is still able to be an active part of Latin America’s life the next natural question arises – what are the contributing factors that can provide the countries of the continent with happy flourishing future? In this respect the reference to sustainable development is of a great importance for it must be a universal goal for any country with prospects on continuing effective existence. “Sustainable Development stands for meeting the needs of present generations without jeopardizing the ability of futures generations to meet their own needs – in other words, a better quality of life for everyone, now and for generations to come” (Bergman). The definition makes clear the point of cultural and environmental angles of the issue, that is, people can and should enjoy the benefits of civilization in order to meet their needs and improve living standards but not forgetting that the selfish and thoughtless use of natural resources can cause environmental problems and even environmental disasters. In other words economic, socio-cultural and environmental sides of sustainable development are interrelated and inseparable for the human progressive living on the Earth. And Latin America is not the exception in this case. It is of no doubt that sustainable development has some factors or activities which can enable it or threaten its realization in life. As our research shows countries of Latin America as others all over the world practice the expending export economy as it serves for improvement of the life. In this regard there is the necessity of the rational use of natural resources of the continent for the production of goods for export, in order not to deplete the reserves of land being accumulated there for centuries. This is the principle of so-called green economy. As for the tourism to Latin America at the present moment its development is on the level of intermediate position. The low share of the region in world tourism is for a number of reasons including: 1) the remoteness of the region from Europe; 2) weak development of vehicles and internal communications; 3) the absence in some countries of Latin America tourism infrastructure that meets modern international standards; 4) difficult economic situation of most countries in the region, the low living standards of the population; 5) the absence of politically stability in many countries of Latin America. Nevertheless, no matter tourists visit Latin America for business or leisure, aiming on eco-tourism, agro-rural one or have their special interest in studying of the continent in any case the growing influx of people interested in the nature of this region serves as a compelling reason for further development of the tourism industry with guidance on sustainable development. Probably the only potential threat of the tourism for sustainable development is the case when people who are involved in this sphere in their tries to attract tourists build up the maximum squares of land with hotels and other recreational areas causing by their activities damage to the environment and consequently impairing the quality of life of the population (avoiding of which underlies in the basis of sustainable development). The next point is drug production which is related to the issue of sustainable development in cultural aspect as well as in environmental one. “There is now not a single country in Latin America which is not affected in some way, shape or form by the symptoms of the drug problem” (Dietz, 3). The negative effect of drugs for the deterioration of life of addicts directly affects the national standard of living of the whole population that is contrary to the main goal of sustainable development. To conclude it all, our strong belief is that the gradual transition away from Neoliberalism can improve or deter Latin America’s sustainability efforts because this development is aimed at improving of the quality of the entire population’s life and not just its separate layer as the elite (it is typical for Neoliberalism policy). Moreover the principle of sustainable development will help to preserve for future generations the whole wealth of the region that is the main aim of humanity. Works Cited Bergman, Mark. Sustainable Development. European Comission, 2010. Retrieved March 15 from: http://ec.europa.eu/environment/eussd/ Dietz, Eva, Lossman, Robert. Drugs and Development in Latin America. Eschborn: Drugs and Development Programme, Sept. 2001. Retrieved March 15 from: http://www.gac.msh-paris.fr/Docs_comun/Drugs_and_Development.pdf Franko, Patrice. The Puzzle of Latin American Economic Development. Maryland: Rowman & Littlefield Publishers, Inc, 2007. Print. Kelly, Lara. Neoliberalism in Latin America. Citizens’ Press, Oct. 2009. Retrieved March 15 from: http://www.citizenspress.org/editorials/neoliberalism-in-latin-america Read More