Edited by Mark Setterfield
Chapter 20: Trade and Economic Growth: A Latin American Perspective on Rhetoric and Reality
Juan Carlos Moreno Brid and Esteban Pérez Caldentey1 1 Introduction There is a longstanding tradition of analysing trade and growth in economics, going back to the discipline’s founders. But for Latin America, the debate on the significance of this relationship has had much more than academic relevance. It has been one of the central components of the different approaches to development that have shaped the region’s economic history, the other (closely related) component being the roles of the state and of the market in economic development. In Latin America, the dominant understanding of the relationship between trade and growth has evolved radically over time. Starting from the position that foreign trade should be managed with the objective of promoting industrialization and domestic development, around the mid-1980s it changed to an opposing view based on the notion that free trade and privatization are the fundamental guarantors of sustainable economic growth. In the last ten years, however, the consensus view has shifted again, to a more critical, sceptical view of the benefits of trade as an automatic and dynamic engine of economic growth. More precisely, the analysis of the trade–growth relationship in Latin America since World War II (WWII) has passed through various stages. The first, which lasted until the early 1960s, was associated with the dominance of the Structuralist school of economic thought. It was marked by a rejection of free trade policies, an emphasis on primary commodity exports and inward, state-led industrialization. In the second stage, which lasted...
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