Corrective policies: aims and instruments

The system of international division of labour, which enabled Latin American countries to initiate their development in the nineteenth century, created asymmetrical relations that were reflected in the close dependence of countries exporting raw materials on the industrialised centres. The development of international economic relations involved not only increased trade between the various nations but also the creation of ‘poles of command’ controlling financial flows, orientating international transfers of capital, financing strategic stocks of exportable products, intervening in the formation of prices, etc. Expansion of the exportable surplus in a Latin American country depended, almost always, on infrastructural investments financed by foreign capital made available when the increment in production entering the world market matched expectations in the world economy's decision centres. What was involved was thus a form of dependence consequent upon the very structure of the world economy. By making economic decisions little more than an automatic operation involving the transfer of price mechanisms from the microeconomy to the level of international relations, liberal ideology diverted attention from this problem and hindered perception of its consequences for the national economies on the domestic plane.

Reference has been made in earlier chapters to some of these consequences. So long as primary exports continued to play a role in these countries similar to that of investments in the industrialised countries, the instability of raw material prices was bound to have far-reaching internal effects.