ISI
What Latin American economic policy aimed to reduce dependence on foreign imports by developing domestic industries?
Import Substitution Industrialization
Import substitution industrialization focused on the development of which sector in Latin American economies?
The manufacturing sector
Governments imposed these to restrict imports, making imported goods more expensive and less competitive compared to domestic products.
Tariffs and Trade barriers
Excessive protection and lack of competition led to...
inefficiency and low quality production
How would you explain what comparative advantage is?
an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners.
Import Substitution Industrialization (ISI) programs were adopted by Latin American nations as a means of...
reducing their reliance on imported commodities
What is meant by "economic diversification"?
helps diversify the economies of many countries by reducing dependence on raw material exports.
To regulate and impose a restriction on the volume of imported commodities, these were utilized.
Import Licensing
inflation, debt and lack of competitiveness
True or false?
Without specialization, if you want something you have to make it yourself, which would ultimately lead to no trade between nations as everyone is self provident.
True
What are three examples of Import Substitution Policies?
Possible answers (only 3 of 7 necessary for points)
- Tariffs
- Import Quotas
- Subsidies
- State creation and ownership of firms
- Attracting MNCs for local production.
- High wage rates and social spending to encourage demand.
- Capital and labor shifted from agriculture to industrial sectors.
How did industrialization under ISI lead to rapid urbanization?
people moved from rural areas to cities in search of better job opportunities in the growing industrial sector
Which of the following policy mechanisms is designed to encourage the development of new businesses and industries within the country?
a) tariffs and trade barriers
b) import licensing
c) subsidies to domestic industries
d) promotion of domestic entrepreneurship
d) Promotion of domestic entrepreneurship
What kind of movements did this period witness?
social and political movements as people sought to address the social and economic issues associated with industrialization.
What is Trade Policy?
Trade policy is the set of regulations that determine how economic relations will develop between local companies or individual and foreign agents.
In the 1970s, Latin America faced significant economic challenges that served as a turning point for the region's economic policies, including Import Substitution Industrialization (ISI), what are the two main causes of this?
- Debt Crisis
- Oil Shocks
What are the main factors that contributed to the industrialization of Latin American economies (1940-1970)
Infrastructure development, urbanization, and technological advancements.
The government provided financial incentives and ----- to promote production and increase their ability to compete with imports.
Subsidies to Domestic Industries
what was the impact on income distribution?
Mixed. While industrialization created a new urban middle class and opportunities, it also led to income disparities. There was often a divide between skilled and unskilled workers, as well as urban and rural populations.
True or false:
Mercantilism promises imperialism, colonialism, tariffs, and subsidies on traded goods.
True
State five primary objectives of Import Substitution Policies
Possible answers:
- promoting domestic industries
- Achieving self sufficiency
- boosting economic growth
- reducing unemployment
- defending national security
- creating a diversified industrial base
What were the significant challenged faced by Latin American countries during the period of industrialization?
a) over-reliance on agriculture, lack of technological advancements, low international trade
b) foreign dependency, rapid urbanization, labor issues
c) cultural isolation, limites access to education, environmental degradation
d) Political instability, excessive government intervention, high inflation rates
b) foreign dependency, rapid urbanization, labor issues
These were manipulated in order to push up the cost of imports. Governments often maintained them excessively high, which raised the cost of imports regardless of local currency.
Exchange rate policies
While ISI aimed to reduce imports, it increased the need for capital goods, leading to trade imbalances and foreign exchange deficiency. This is called?
Balance of payment problems
BONUS: from which year to which year was the Import Substitution Industrialization in Latin America?
1940-1970