ABSTRACT
Much of discussion about the political economy of development has turned upon a contrast between Latin America and East Asia. East Asian growth, seen largely as the result of dynamic export-oriented industrialisation (EOI), has been juxtaposed with a relatively more sluggish Latin American performance. This has raised the question: why did Latin America persist for so long with a more protectionist model emphasising import-substituting industrialisation (ISI), despite foreign exchange crises and International Monetary Fund (IMF) prodding? One common answer implicates political weaknesses that bloated the state, protected urban industrialists, and coddled labour unions. Alternatively, the divergence is explained with reference to the wishes of foreign actors, especially the US government. The chapter emphasises another dimension of the contrast: the size of the structural and hence political obstacles faced by middle-income developing countries in the turn to exporting low-wage manufactured goods.
