Economic Paradigms and Latin American Development Theory: The Search for Nirvana

Abstract

The pursuit of the optimal, economic development paradigm in Latin America has proved to be as elusive as the search for nirvana. This paper will describe and put into context the major theories of economic development that have served as the basis for Latin American trade policy, both in the United States and Latin America. I will do so by first analyzing the modem theory of economic andpolitical development articulated by Walt Rostow and others. I will then examinethe theory of import substitution principally put forth by Ratil Prebisch and the United Nations Economic Commission for Latin America. Thirdly, I will consider the neo-liberal economic development theory first articulated by the University of Chicago-trained economists who served in the Chilean government led by General Augusto Pinochet. I will then conclude with a number of observations regarding the analysis and applicability of these paradigms to the Latin American context.