Final answer:
Latin American countries shifted towards import substitution industrialization (ISI) to reduce dependency on foreign goods and balance their economy after realizing that a reliance on exports was harmful.
Step-by-step explanation:
When Latin American countries realized that an economy heavily reliant on exports was detrimental, they faced a complex situation. The initial phase of post-independence economic policy saw an influx of European and North American goods that outcompeted local products. With silver and wealth flowing out to purchase foreign manufactured goods, domestic industries suffered, leading to a dependency on raw material exports, such as coffee, sugar, and later rubber, instead of fostering local manufacturing.
As Latin American countries encountered difficulties like increased competition in agricultural exports and an inability to compete with imported goods, they began to change course. Many nations ended up adopting import substitution industrialization (ISI) during the 20th century, an economic policy aimed at reducing dependency on imported goods by creating domestic industries. This shift was part of a broader attempt to create a more balanced and self-sustaining economy.