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Latin America is undergoing something of an industrial policy revolution of late. Having ditched its destructive neoliberal policies from 2000 onwards, and then having seen the supposed efficient-market foundations of the entire neoliberal model effectively blown apart by the global financial crash of 2008, it was inevitable that a major policy change was in order. Yet, today, the speed with which a new industrial policy movement is taking place has surprised many observers. These new policies are being informed both by important prior experience in Latin America, principally the import substitution industrialization (ISI) policy period (1950-1980), as well as by significant ‘best practices’ from elsewhere, notably from China, Italy, the Republic of Korea, Scandinavia and especially from Latin America’s own star performer, Brazil. Perhaps the most interesting aspect of the rebirth of industrial policy in Latin America, however, is that there is a very definite focus on the specifically local aspects of industrial policy formulation and implementation. This specific focus arises for two reasons. First, many governments in Latin America have deliberately chosen to decentralize many of their activities and operations. Local services provision is not only more cost-effective. It also serves to promote greater accountability and transparency in governance. Decentralization has also been seen as a way of more directly involving
Milford Bateman suggests that new forms of industrial policy are (re)emerging, including at the local level, and are beginning to transform the continent’s industrial structure in a positive direction
America’s local economies. Even the neoliberal-oriented Inter-American Development Bank now laments the fact that Latin America’s financial system channelled so much of the continent’s scarce financial resources into informal microenterprises and self-employment ventures, a market-driven process it now concedes achieved nothing more than “the pulverisation of economic activity into millions of tiny enterprises with low productivity”. Ecuador is perhaps the most obvious example of the new counter-trend towards proactive local industrial policy. Its central government under President Correa has made a determined effort to devolve power and resources down to local governments, and so much closer to poor and marginalised people. Local governments are now the centre of much pro-active industrial development activity. One policy common to many parts of Ecuador is to establish farmerowned cooperatives linked to new state-ofthe-art food processing units. These programmes not only help to ensure quality affordable outputs for local consumers, the use of appropriate environmentally sensitive packaging and phytosanitary certification to enable export, but also ensure that the bulk of the value added generated goes back down to the basic producers, not up to rich intermediaries or out to shareholders of multinational corporations. In Brazil, we are all aware of the impressive track record of the state development
ethnic and social groups long marginalized under authoritarian rule. Second, there is also the growing acceptance that the continent’s de facto local economic policy model for many years – microfinance – has been a disaster. The vast microfinance industry has absorbed scarce financial flows which were then overwhelmingly recycled into millions of the very simplest forms of informal ‘no-growth’ retail and street trade, handicrafts and petty services. At the same time, growth-oriented small and medium-sized enterprises (SMEs) were increasingly ‘crowded out’ of the market for financial support, while also struggling to compete against rafts of informal microenterprises that pay no tax, offer bare survival wages and have no interest in ensuring decent health and safety conditions at work. The overarching result has been the de-industrialization, informalization and primitivization of Latin
Photo: Eco Images/Getty Images
Photo: Simone Carneiro/UNIDO
‘Bottom-up’ development in
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