Before WWII, Latin American countries relied heavily on exporting primary products such as raw materials and agricultural goods to industrialized countries. This economic strategy was often referred to as the "export-oriented model." This model was highly dependent on global economic conditions and led to instability as the demand and prices for primary products fluctuated. Additionally, the profits from exports were often controlled by foreign investors, leaving little investment for local development.
During and after WWII, many Latin American countries began to shift towards inward-looking strategies, or import-substitution industrialization (ISI). ISI aimed to promote industrialization and economic self-sufficiency by replacing imported manufactured goods with locally produced ones. This strategy was supported by government policies such as tariffs on imported goods and subsidies for domestic industries. The goal was to create a more diversified economy and reduce dependence on foreign markets.
One of the main reasons for the shift to ISI was the disruption of global trade during WWII. Countries were cut off from traditional markets and faced shortages of imported goods. Additionally, there was a growing sense of nationalistic pride and a desire to promote domestic industries and local development.
However, the implementation of ISI had mixed results. While it did promote industrialization and diversification, it often led to inefficiencies and low productivity. Domestic industries often faced protectionist policies that sheltered them from competition, leading to a lack of innovation and a lack of competitiveness in global markets.
Overall, the shift towards inward-looking strategies in Latin America after WWII was driven by a desire for economic self-sufficiency and a response to global disruptions. While it did promote industrialization and diversification, it also had its drawbacks and limitations.