chapter  2
Industrial Policies
WithRobert N. Gwynne
Pages 13

Arguments about the policies countries should adopt in order to industrialise go back to the late eighteenth century. Adam Smith stressed the need for countries to specialise in those commodities or industries in which they held a comparative advantage. It was noted that all major industrial countries had industrialised behind high protective tariffs. Developing in the late 1950s and 1960s, the motor vehicle industry was critical to the process of import substitution industrialisation. Motor vehicle and components exports now account for almost 10 per cent of Brazil's total exports, a fact that has made it a leading vehicle exporter, more important than the United States. The most radical reorientation of industrial policy in terms of the shift from import substitution to export promotion occurred in Chile after 1974 under the Pinochet government. The process of industrialisation and policy change in Latin America reflects the differences between large and small countries as they attempt to industrialise.