“Not a Marshall Plan for Latin America”: International Payments and the Ecla Network, 1953–56

Thursday, January 7, 2016: 1:40 PM
Grand Hall D (Hyatt Regency Atlanta)
Margarita Fajardo, Princeton University
The end of the Korean War brought terminated a brief commodity boom in Latin America, resurrecting the issue of the finance of the region’s development strategy. In that moment, countries like Brazil and Chile faced severe and recurrent balance of payments crises. These crises imperilled external stability, one of the pillars of the postwar order, and threatened export proceeds, the primary source for financing industrialization and development. Thus, national development and global integration were proving irreconcilable unless foreign exchange and capital were made available. This paper follows Felipe Herrera and Roberto Campos, two key policy actors in Chile and Brazil, respectively, as they discovered and confronted this dilemma. Thus, it first explores  national policymaking experiences with devaluation, trade and capital restrictions as well as institutional reforms. Then, it shows how Herrera and Campos coalesced around UN Economic Commission for Latin America (ECLA)-led proposals to attract foreign capital and create financial institutions that would circumvent the trade-off between national development and international stability. Using correspondence between regional economists and policymakers,  the staff of international organizations like the International Monetary Fund and the UN ECLA as wells as conference proceedings and press reports, the paper shows how Latin American economists tried to fine-tune the development strategy vis-à-vis the international system. By dealing with global policy concerns such a dollar shortage and international payments stability, regional experts consolidated a notion of a Latin American economic “structure” which in turn, nurtured the idea of a regional approach to development, so-called “structuralism.” My paper demonstrates how global, monetary concerns fostered a consensus around import-substitution industrialization (ISI), the adopted development model for the region. Thus, the paper situates the history of Latin American development within the story of the making of a global economic order.