Final answer:
The success of import-substituting industrialization in South American countries had mixed results, with both achievements in localized manufacturing and challenges hindering wide-scale industrial development. It proved less effective than open economic policies and faced eventual reduction due to global financial pressures.
Step-by-step explanation:
The impact of import-substituting industrialization (ISI) in poor South American countries had mixed results, reflecting a combination of successes and failures. Despite some success in promoting local manufacturing, like textiles and electronics, the strategy faced challenges due to small domestic markets and difficulty in developing capital-intensive industries without trade protectionism. Furthermore, the dependency on imported machinery and expertise, along with high tariffs necessary to protect these budding industries, increased the demand for scarce skilled labor and capital while not adequately using the abundant unskilled labor. While some nations like Venezuela saw some economic growth through commodities like oil, others did not see significant change and remained primarily exporters of cash crops.
In general, Latin American nations struggled with obstacles to industrialization post-independence, such as regional wars, competition in export markets, and dependence on foreign banks and imported equipment. Their attempts at industrialization, such as railway construction, often did not lead to comprehensive national development, and electrification was limited to major cities. By contrast, countries that kept their economies open to both imports and exports, such as in Asia, generally saw more successful development.
By the 1990s, many overt protectionist policies relating to ISI had been abandoned, partly due to pressure from international financial institutions like the International Monetary Fund. However, most governments still engage in protective actions designed to shield domestic industries, highlighting the continued tension between free trade and protectionism in global trade policies.