ABSTRACT
This chapter discusses the history of trade policy in Latin America before, during, and after the implementation of Import Substitution Industrialization (ISI). The history is critical in understanding Latin America’s relative isolation from the world economy and the lingering effects of ISI in the region. The argument was that the terms of trade were declining for Latin America, and this implied that reducing international trade would improve economic performance in region. In economics, trade policy refers to government actions that influence the flow of goods and services to and from a country. The history of trade policy in Latin America before ISI can be summarized in this way. The mercantilist policies of Portugal and Spain left the region with a historical legacy of protectionism. In the post-World War II era, Latin America was becoming more protectionist. One of the best-known examples of how transportation costs affect trade in Latin America is the difficulties associated with exporting soybeans from Brazil.
