CHAPTER 8

The Great Depression ended one era and inaugurated another in Latin America. With global demand and prices for Latin American commodities collapsing, the era of export-led modernization ended. With export revenues dissipating and little money for imports, governments adopted a new strategy of economic nationalism, known as Import-Substitution Industrialization (ISI). Under ISI, most of Latin America made strides in light manufacturing, producing consumer goods like textiles, shoes, processed foods and beverages, and cigarettes for national consumption. Only the largest and wealthiest countries – Brazil, Argentina, Mexico, and to some extent Chile and Uruguay – also achieved heavy industrialization, producing capital-intensive goods like steel, machinery, cement, and petrochemicals behind high tariff barriers. The decline of export agriculture and the rise of manufacturing contributed to the other key trends of the period 1930-1950: continued urbanization and the rise of an organized urban working class.

With the incumbent political class still dominated by the old oligarchies, a new breed of "populist" politicians emerged to shake up the system. Charismatic and ideologically heterodox, populists appeared as the embodiment of the national and popular will against the elitist, exclusive old guard. Often dispensing charity and patronage along with inclusive rhetoric, they incorporated organized labor and the urban poor into national politics. Continuing the trend of centralizing power, they remade the national executive into a powerful – at times authoritarian – mediator between and manager of interest groups: government-linked labor unions, domestic capitalists, regional powerbrokers, the military, and foreign investors. Populist leaders arose but struggled to gain and hold power in Colombia, Ecuador, and Peru, and achieved their greatest success in Mexico, Brazil, and Argentina. In several nations of Central America and the Caribbean, where the United States adopted a new policy of non-intervention, Depression-era populism produced more nakedly authoritarian dictatorships, in which the stick of repression predominated over the carrots of inclusion, social advances, and patronage.

 

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