Transcript Historical Development of Political Economy in Southern

Historical Development of Political
Economy in Southern Cone and larger
Latin American States
Politics is about creating alliances
and maintaining good relations with
key constituents in order to stay in power
and accomplish political objectives.
As issues and context change, alliances
may break down, and new allies have to
be sought out. Likely result is a shift in policy
stance.
Eco and Pol Development, Periphery I, 18801930s
Eco Strategy:
Export-led growth
Target Market:
Western Europe, United States
Needs:
1. Transport and communication
networks
2. Labor
How to meet needs? Alliance between local elites
and foreign capitalists
Export-led Growth: Economic Side
Economic Process
Raw materials
exported to
industrialized states;
manuf. goods
imported from industr.
states to L.A
Export-led Growth: The Political Side
Political Arrangement:
“Oligarchic Democracy”
Political
Representation: Limited
to rural and urban upper
classes
Political Challenges to Export Strategy and Oligarchic
Democracy, 1910s
• Rise of new classes
• Loss of communal
lands by indig.
groups (Mexico,
Peru)
• Emergence of new
parties to represent
new classes
Economic Challenges to Export Strategy and
Oligarchic Democracy, 1930s
• Great Depression
brought sense of
betrayal towards
modernizing elites
and foreigners
• Rural-Urban
Migration
Eco and Pol Development in Periphery I, 1940s1960s
Eco Strategy: Import Substitution Industrialization
--ISI is a development strategy in which
the State turns inward and attempts to
develop from within, placing emphasis
on production for the domestic market
Target Market: All Domestic Urban Classes (numbers
matter)
How to meet needs? Alliance between govt and urban
capitalists, military, and urban workers
ISI: The Economic Side
Investment capital
tends to be domestic –
either private or public
(state development
banks)
Ownership: Domestic
private ownership and
State-owned industries
ISI: The Political Side
Populism: charismatic form of rule that offers great hope to
broad sectors of society; patriotic and nationalistic, but also
inclusive and sympathetic to plight of poor
Populist Alliance: entrepreneurs, organized labor, and
modernizing military officers
Political Representation Under Populism,
1940s-1950s
Characteristics of 1940s-50s Populism
Ideology:nationalistic, anti-imperialistic, anticommunist, incorporating, supported state
intervention in economy
Leadership: dynamic, charismatic, use of
mass rally, charity, “benevolent dictators”
Promise of Growth + Development
Crisis of ISI as an Economic Strategy
Exhaustion of ISI in late-1950s and early1960s. Why?
1. Return of foreign competition
2. Inability to compete abroad
3. Industrial growth too dependent on
imports of capital goods, resulting in b of p
deficit and debt
4. Decline in traditional export earnings
Collapse of Populist Alliance
When economy went downhill, coalition began to
unravel. Why?
1. Organized labor bargains with state to lock
in wage increases
2. Manufacturers demand continued
subsidies, protection from competition
3. Wage-push inflation -- too many dollars chasing
too few goods pushes inflation into triple digits
Govt must choose between Growth and Development
The Choice:
Growth vs. Development, Dictatorship
vs. Electoral Socialism
The Answer: Bureaucratic-Authoritarian Rule
In late-1960s and 1970s, all Southern Cone
and
larger
L.Am.
countries
eventually
experienced some form of B-A rule and
attempts to “deepen” industrialization through
dependent development
Dependent Development, 1960s -70s
Eco. Strategy:
“Deepening” of Industrialization -manufacture of durable and capital
goods
Target Market:
Urban upper classes and foreign
markets
Needs:
Capital; labor-saving technology
Dependent Development:
The Economic Side
Tech and Firm Size: capital intensive, efficient and
competitive; large plants
Investment: Foreign investment through joint
ventures with multi-national corporations (MNCs)
How?
1. Create stable investment climate
2. Place economy in hands of técnicos
Role of State in Dependent
Development
State-led growth
• Cut resources for poor
• Increase state spending
on technology and
investment in business
Theory: put $ in hands
of those who can
purchase durable
consumer goods
Ex. – Brazil, Argentina
Neo-liberal free-marketled growth
• Cuts in social spending
• Lower tariffs and cut
subsidies to businesses
• Privatization of stateowned industry
Theory: Rationalize the
economy and eliminate
inefficient firms
Ex. – Chile
Dependent Development:
(B-A Rule)
The Political Side
Bureaucratic-Authoritarian regimes are
“excluding,” non-democratic forms of political
rule in which military officers and technocrats
work in close association with foreign capital to
advance industrialization
--elimination of electoral competition
--elimination of democratic institutions
--human rights abuses/repression
Examples of B-A Rule
Brazil – 1964-86; succession of Presidents from
armed forces
Chile – 1973-90; Augusto Pinochet
Argentina – 1966-73, 1976-83; succession of juntas
Uruguay – 1973-84; civilian presidents with military
administrators
Peru – 1968-80; established “Revolutionary
Government of the Armed Forces”
Mexico – 1960s (when govt turns more repressive)
– 2000; questionable B-A rule (one-party dominant
rule, dictablanda)
Economic Challenges to B-A Rule,
1980s
1. International Recession
2. Foreign Debt (b/c of large capital outlays
by State at high interest rates and
economic recession)
3. Rise in economic deprivation
--unemployment and underemployment
--widespread poverty
--shortage of housing and social services
Political Challenges to B-A Regimes
1. Mass social movements
2. International
condemnation of political
repression
3. Collapse of economy
reduces incentives to
stay in power
Political Economy of Periphery I,
Rule
Eco Strategy:
post-B-A
Economic liberalization and market
integration w/ stronger welfare state
Target Market: Urban domestic, foreign
Investment:
(predominantly
Foreign and domestic
from MNCs)
Based on liberal economic theory -- global integration
creates jobs, makes industry more productive and
consumer goods available at cheaper prices
Politics of “New Democracies”
Characteristics
--Limited, procedural democracy
--During economic hard times or
political crises, temptation to
revert to non-constitutional
practices
--Although some countries have
made strides at strengthening
judicial system, others still have
corrupt, weak law enforcement
and legal system