David Felix

Import substitution and late industrialization: Latin America and Asia compared

Abstract Asymmetries between the profit-risk perceptions of foreign and domestic investors are unavoidable aspects of late development. Import substitution strategies that try to advance industrialization by compensating for the asymmetries have, therefore, been part of the development efforts of Asian and Latin American NICs. Current explanations of the greater success of Asian NICs with ISI are examined and an alternative is advanced that stresses the impact of culture and history on consumer preference formation and through this on the survival and modernizing of craft industry. Partial evidence plus suggestions for deeper testing are offered.

International capital mobility and Third World development: Compatible marriage or troubled relationship?

The current surge of foreign capital to the Third World resembles that of the 1970s. The channels are now different but the extra-regional flows are again predominantly to Latin America followed by East Asia. Many of the Latin American countries whose overborrowing brought on the 1980s debt crisis are again overborrowing to compensate for low savings rates and other structural flaws, putting their balance of payments at increasing risk. The likelihood that this time they can handle the rising debt servicing and impending slowing of the inflows sans prolonged crisis or a major retreat from their market liberalization policies is not very high, whereas the East Asian countries appear once more structurally capable of riding out the repercussions from an international financial market pullback.