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Critically discuss how industrialisation been promoted in Latin

America, Sub-Sahara Africa and Asia, and why it has succeeded
and/or failed. Illustrate your discussion with contrasting models of
industrial development and empirical examples from the
comparative political economy of developing economies and
emerging markets.

Name: Omar Mohamed Wagih
ID: 115160





Dr: Maria Sottimano
Date: 8/5/2014
Word after exclusion: 1943
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Contents
Abstract: ..................................................................................... 1
Introduction: .............................................................................. 2
Development Success and Failure: ......................................... 3
Conclusion: ................................................................................ 7
Bibliography: ............................................................................. 8


Abstract:
Throughout the 20
th
century industrialization has spread through most countries of the world
and dominated its economies, policies may differ in different regions of the world; whether the
"ISI", mineral export led growth or growth led by manufactured exports policies, but the goal is
common in principle, which is development. The purpose of this essay is to prove that
industrialization policies of the 20
th
century in Latin America and Sub Saharan Africa have failed to
continue to succeed in the 21
st
century, despite it has succeeded in the 20
th
century or not. While
on the other hand, it will prove that the East Asian countries' industrial policies in the 20
th
century
have succeeded to implement its footprint on the world market and provide a good model of
development as a member of the NICs in the 21
st
century. This paper will be divided into three
body paragraphs, as the first body paragraph will define development, afterwards it will discuss
industrialization and the policies used in industrialization such as ISI Mineral export led growth-
growth led by manufactured exports policies ... etc. In the second body paragraph, case studies of
the three regions will be discussed; comparing between the three models, where in Latin America
there is a successful model and a failing model, Brazil is a successful one, while Venezuela is a
failing model. On the other hand in Sub Saharan, Botswana is considered a successful developing
model, and Tanzania as a failing model to continue developing after changing its policies from ISI
to agriculture. Finally, in Asia, South Korean government managed to control the market and set
prices, limiting the number of firms entering the industrial zone, in short; it intervened and targeted
certain industries such as steel. The context of the state will be examined; their political and
economic policies; as in Latin America these policies were implemented in the 1930s, and in Sub
Saharan -after independence-, they used to have a contest with the East Asian states in the
income level, but unfortunately now the Asian states now have higher income levels, In the third
body paragraph, it will analyze whether these policies implemented have succeeded to reach the
final goal or not, which is development. Analysis will provide why each model succeeded or not,
concluding that the East Asian model is the most successful one to develop.

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Introduction:
If there is a challenge or a race between nations, then probably it is a challenge for
development and progress. Recent development in the world is advanced through high technology
and good policy making. These policies include the industrial policies which indeed affect the
developmental path, these policies could be "Import substitution industrialization", "Manufactured-
export led growth", "Mineral-export led growth"... etc. During the 20
th
century, nations varied in
their industrial policies, but initially they adopted the ISI for a certain period of era; due to different
reasons, as some states such as the Latin American states; had these policies adopted under a
certain regime that is populist, and accordingly they failed to progress after along time, while
others succeeded to develop when they adopted different policies such as the Asian tigers. The
purpose of this essay is to prove that industrialization policies of the 20
th
century in Latin America
and Sub Saharan Africa have failed to continue to succeed in the rest of the 20
th
and beginnings of
the 21
st
century, despite it has succeeded in the 20
th
century or not. While on the other hand, it will
prove that the East Asian countries' industrial policies in the 20
th
century have succeeded to
implement its footprint on the world market and provide a good model of development as a
member of the NICs in the 21
st
century.
The structure of the essay will be divided upon the following, first it will examine what
development means, in addition to the definition of industrialization and its' policies. In the second
part, the essay will study the industrial state models in the three different regions and their
industrial policies -whether failing or successful ones- will be examined. States such as Brazil and
Venezuela in Latin America, while in Sub Saharan; Botswana and Tanzania, and finally South
Korea in Asia. In the final body paragraph, analysis will observe whether these policies
implemented have succeeded to reach the final goal or not, which is development. It will conclude
that the East Asian model is the most successful one to develop, arguing that their policies have
managed to develop them as a challenging industrial state with the first world nations.

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Development Success and Failure:
Development as a term is not a product to be weighed by GNP statistics, but it is a method of
change that allows humans to take the responsibilities of their destinies, and realizing their
complete potential. Generally development requires people to build up their self confidence,
freedoms and skills to achieve their aims. To narrow it down with the essay's purpose, economic
development is not concerned with having more, instead it means being more. It is about the
development of the economic measure and a rise in the economy of a state, whether it is
implementing policy X or policy Y (Slim, 1995). There are several industrial policies implemented
by governments to develop and prosper; according to the states that will be examined, the "Import
substitution industrialization", "Manufactured-export led growth", "Agricultural- export led growth"
and "Mineral-export led growth" will be the policies that are studied.
The import substitute industrialization is an economic policy that dates back to the 20
th
century
calling for the return to depending on the domestic production rather than the foreign imports. It
advocates the reduction of the dependence rate on the foreign products through local production
of industrialized products. This policy was implemented more by the southern states aiming to
develop and be self-sufficient, affected by the British industrialization in the beginning (Baer,
1972). ISI appeared in states who gained independence, its features are nationalization, high
taxes and subsidization, but it gradually was abandoned by the states that implemented it in the
1980s and 1990s. Latin American, African and Asian states applied the ISI at first, but gradually
some failed and some succeeded, some changed their policies when it was time to open their
economies and some changed it when they failed to develop (Street, 1982). On the other hand,
the export led policies whether they are manufactured, agricultural or mineral, mainly focuses on
the foreign markets and increasing the capacity of the production. This policy has emerged in the
1970s substituting the ISI, where it was implemented by Asian tigers (South Korea specifically) in
1980s and Botswana in Africa, in addition to the successful and failing economies in Latin America
that have implemented ISI, they have shifted to the export led as shown in table (1), due to the
performance of the economy (Kenneth S. Lin, 1996).
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Country
CBI index Turnover Average Inflation Standard Error
inflation
GNP growth

In Latin America, two cases will be examined, both adopted the ISI model after the great
depression which appeared as they used it as a defensive response, and by the 1980s they
shifted to the export led policies. In general, the Latin American states were based on a populist
regime where they had to provide their populations services under the notion of the unity of the
state under this regime, owning state enterprises and controlling the market, such as Venezuela
and Brazil. In Venezuela, it adopted the ISI and as shown in table 1 it discuss how Venezuela
failed to increase its GNP during this policy. "Venezuela was among the fastest growing
economies in Latin America in the period 1920-1980 and its manufacturing growth rate was
among the most rapid until the mid-1970" (John, 1998). Yet, from 1980 to1998, non-oil and
manufacturing growth rates experienced long-run stagnation; while in 1998-2003, the
industrialized growth distorted. The process of shifting to the export led to recover from the
economic recession took place in 1989. As (Alvarez, 2004) claimed that the export led policy in
Venezuela needed to reduce the obstacles on the free market, requiring improvements in
efficiency in the financial system, trade policy and labour market; these policies by time started to
recover by the 1990s and "This implied little export diversification though and non-traditional
exports are still a mere 25% of total exports" (Alvarez, 2004). On the other hand, Brazil adopted
ISI also after the great depression, having a profound impact, owning the market and enterprises.
It was from 1947 that the state controlled the exchange rates, "throughout the period of 1947 until
1953; the domestic currency became increasingly overvalued" (Cardoso, 2009), allowing in 1953
for more flexible exchange rate system giving chance to the inflow and outflow of capital as well as
buying and selling foreign exchange. The ISI in Brazil managed to inspire the industry there and
succeeded in shifting resources into with slow development. And in the end Brazil managed to set
up a successful steel industry, working on state owned enterprises and ISI model. By the 1980s
Venezuela 0.37 0.30 12.7 7.5 -0.3
Brazil 0.26 N/A 273.3 203.9 2.4
South Korea 0.32 0.43 10.9 9.3 7.2
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Brazil started to change its policies and adopt a liberalization economic policy achieving great
results in diversification of the exports (Cardoso, 2009). Therefore the Brazilian model shifted its
policies in reaction to the market changes, unlike Venezuela who changed its policies when it
failed in achieving good results, this differs.
In Africa, developing states implemented the ISI model first and challenged the globalized
economy ending up turning to the export led policies, where Botswana depends on minerals and
Tanzania depends on agriculture. The shifting process started in the 1980s when the GDP of
Botswana fell from 5% to 4% and in Tanzania from 18% to 9%, and that was an appropriate timing
for the African states (Kapunda, 2014). Concerning Botswana, in 1998 it had to modify its trade
policies and make it applicable to the economic and global situation, as "The resultant 1998
Industrial Development Policy shifted the strategy to export-oriented industrialisation" rising 5%
average from 1996 to 2004, and to prevent taking a risk of failure, the Botswana government has
adopted the diversification away from the mining filed (Kapunda S. M., 2005). Tanzania since its
independence in 1961 has depended too on the ISI policy, and by 2003 the government
implemented a national trade policy in order to promote export led growth policies in the economic
sector. Unfortunately, they faced solid challenges from the East Asian countries and South African
countries, where their contribution to the industrial exports decreased from 11% in 1980s to 7% in
2004 (Kapunda S. M., 2005). In short, Botswana has changed its policies in the end of the 20
th

century making use of its natural resources, creating a good balance in its economy, while
Tanzania's shifting to exports industries declined and failed to fulfil its expectations to develop.
The Asian Tigers and specifically South Korea, have implemented ISI as a primary industrial
policy, but during the 1960s it shifted to a developmental strategy based on export led industrial
policy overtaking the developed states in Latin America and Africa. This step has succeeded due
to certain functions; thus South Korea has implemented a stable political system adopting
macroeconomic policies, keeping inflation low, high domestic savings rate, giving assistance
maintain investment without suggesting exterior vulnerabilities, and finally; having an equal income
distribution. It worked on protecting certain industries through tariffs, took care of their products
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through export subsidies, guiding firms to new type of products and set exports targets and
rewarded those who met their expectations. In directing funds to their industries, South Korea had
owned all the commercial banks; setting controls on prices. "Government interventions by East
Asian countries, in accordance with ISI, were less severe and more targeted at specific industries
such as textiles, industrial chemicals, iron, and steel", but during the export industrial period,
achieving good records, as they started first with textile manufacturing ending up to high
technological products. South Korea and other NICs managed to exceed the Latin American and
African economical record through utilizing in the creation of agricultural infrastructure for instance
cleanliness, water and electricity. It is noteworthy to point out that without the American assistance
to those East Asian states, they would have never raised up as they are nowadays. The
Americans have funded them in the face of the Soviets during the Cold War building up their
industrial capacities (Polin, 2005). This proves that due to the American assistance to the NICs in
the 20
th
century and the good infrastructure South Korea created in its economy through shifting to
the export led, and giving spaces for the private sector to provide what the society lacks, and the
state controls the commercial banks for national subsidized products to be exported in the 20
th
and
21
st
centuries having the leadership of the technological sector; the Asian Tigers managed to
implement its footprint on the world market and provide a good model of development.


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Conclusion:
All in all, this essay has examined three different parts of the world and their economic status,
it has showed that the Latin American states and the African states after adopting the ISI, they
have failed to continue adopting it and worked on changing their policies, in LA Venezuela failed to
develop via the ISI while Brazil managed to create a stable economic model, on the other hand in
Africa after failing in the ISI, Botswana managed to succeed in its mineral exports in addition to its
diverse products, while Tanzania did not reach the ultimate goal they expected after changing their
economical policies. Finally it has proven that the Asian Tigers as a whole have managed to
succeed in both policies; the ISI and the export led growth, in addition to the USA assistance, and
it used South Korea as an example to prove that the Asian Tigers managed to implement its
footprint on the world market and provide a good model of development.

"A graph showing how Asian Tigers have managed to stay successful during the 20
th
and 21
st
centuries" (Rozenwurcel, 2006).

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Bibliography:
1. Alvarez, D. E. (2004). Venezuela: Attempting Export-Led Growth. Retrieved from Cite Seer
X: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.197.9224&rep=rep1&type=pdf
2. Baer, W. (1972). Import Substitution and Industrialization in Latin America: Experiences and
Interpretations. Latin American Research Review, 95-122.
3. Cardoso, E. (2009, March). A BRIEF HISTORY OF TRADE POLICIES IN BRAZIL: FROM
ISI, EXPORT PROMOTION AND IMPORT LIBERALIZATION TO MULTILATERAL AND
REGIONAL AGREEMENTS. Retrieved from Tulane University:
http://www.tulane.edu/~dnelson/PEBricsConf/cardoso-trade.pdf
4. John, J. D. (1998). The Political Economy of Industrial Policy in Venezuela. Retrieved from
Harvard University: www.cid.harvard.edu/events/papers/0604caf/DiJohn.doc
5. Kapunda, S. M. (2005). AFRICAN INDUSTRIAL DEVELOPMENT BEYOND IMPASSE:
THE CASE OF BOTSWANA, TANZANIA AND ZAMBIA. Retrieved from CODESRIA:
http://www.codesria.org/IMG/pdf/kapunda.pdf
6. Kapunda, S. M. (2014, Febraury 25). Trade and Industrial Development in Africa:
Rethinking Strategy and Policy. Retrieved from CODESRIA:
http://www.codesria.org/IMG/pdf/03-_Trade_and_Industrial_Dev_in_Africa_Kapunda.pdf
7. Kenneth S. Lin, H.-Y. L.-Y. (1996). The Role of Macroeconomic Policy in Export-Led
Growth:The Experience of Taiwan and South Korea. University of Chicago Press, 193 -
227.
8. Polin, K. (2005). East Asian Industrialization and the Third World. Retrieved from Brandeis
University: https://people.brandeis.edu/~monsoon/articles/polin_industrialization.htm
9. Rozenwurcel, G. (2006). Why Have All Development Strategies Failed in Latin America?
United Nations University, 1-19.
10. Slim, H. (1995). What Is Development? Oxfam GB, 143-148.
11. Street, J. H. (1982). Structuralism, and Dependency in Latin America. Journal of Economic
Issues, 673-689.