Methodological basis

External vulnerability, a reflexion of fluctuations in the prices of primary commodities on the world market, led several Latin American governments to assume growing responsibilities on the economic plane even before the 1929 crisis. We have seen how the need to regulate coffee supplies obliged the Brazilian government to undertake heavy financial commitments, with far-reaching repercussions on the monetary and fiscal planes, and how these commitments took the form of a compensatory policy in the 1930s, with profound consequences for the subsequent evolution of the national economy. We have also drawn attention to the complex exchange controls practised by Argentina during the decade of the Great Depression in order to cushion the domestic impact of external instability and pointed out the positive form taken by the Chilean reaction during the same period: a greater appropriation of resources generated by the export sector (controlled by foreign groups) and their allocation to strategic sectors, through a state agency specifically established for this purpose, with a view to diversifying productive structures.

By and large, the period extending from the end of the 1929 crisis to the end of the Second World War is characterised by development geared to the national domestic markets which Prebisch would call ‘development inwards’ as opposed to the ‘development outwards’ of the preceding period, based on growing participation in the system of international division of labour. After a time, this new development pattern raised the immediate problem of remodelling and broadening infrastructures.