The Latin American Transition from an Inward-Oriented Industrialisation Strategy to a Natural Resource-Based Model of Economic Growth

Induced by the rapid expansion of world demand for industrial commodities and foodstuffs many Latin American countries have over the past two decades restructured their economies in the direction of a natural resource- based development model. The transition has had a major impact upon the macro and microeconomic functioning of the economy, opening up crucial questions for which received theory – both neoclassical and evolutionary – yet do not provide adequate answers. At the macro level various countries have suffered from the Dutch Disease syndrome, considerably deteriorating their international competitiveness in industries of medium-high technological sophistication and further advancing towards the commoditization of their production structure. At the micro level various episodes of the Tragedy of the Commons indicate that new regulatory institutions and law enforcing capacity from the part of public sector agencies, as well as new forms of ‘collective action’ from the part of firms exploiting natural resources, are urgently needed in order adequately to deal with long term environmental sustainability and social inclusiveness, both of which have been considerably affected by the rapid expansion of the natural resource exploitation frontier. These aspects are discussed in the paper looking at the recent experience of Argentina, Brazil and Chile.