University of Montana ScholarWorks at University of Montana Graduate Student Theses, Dissertations, & Professional Papers Graduate School 1957 Some aspects of economic development and economic growth of Latin America Jaime Francisco Acosta-Madiedo de Castro The University of Montana Follow this and additional works at: https://scholarworks.umt.edu/etd Let us know how access to this document benefits ou.y Recommended Citation Acosta-Madiedo de Castro, Jaime Francisco, "Some aspects of economic development and economic growth of Latin America" (1957). Graduate Student Theses, Dissertations, & Professional Papers. 5131. https://scholarworks.umt.edu/etd/5131 This Thesis is brought to you for free and open access by the Graduate School at ScholarWorks at University of Montana. It has been accepted for inclusion in Graduate Student Theses, Dissertations, & Professional Papers by an authorized administrator of ScholarWorks at University of Montana. For more information, please contact [email protected]. SOME ASPECTS OP ECONOMIC DEVELOPMENT AND ECONOMIC GROWTH OP LATIN AMERICA JAIME P. I. ACOSTA-MADIEDO DE CASTRO B.Ao Montana State University, 1956 Presented in partial fulfillment of the requirements for the degree of Master of Arts MONTANA STATE UNIVERSITY 1957 Approved by: Dean, Graduate School K\uM // If ^7 Date V J UMI Number: EP40595 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Pjbfeh-ng UMI EP40595 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 "KNOWLEDGE AND MORALITY ARE OUR GREATEST KEEDSW Simon Bolivar ACKNOWLEDGMENT Whichever our purpose In life may be, Whatever we may accomplish, we can never say %e owe it only to ourselves©** The '.writer is indebted to the works of many able scholars for the ideas presented and developed in this thesiso He is grateful for the assistance provided by the Economics Department of Montana State University, and its excellent faculty, in particular to Dr© Roy Ely, and to his thesis advisor Dr<» George Eeliker, who gave him confidence in his pursuit• He is also greateful to Miss Mary Lou Flodin, who gladly devoted many hours assisting the writer in the technical part of the language; and also to his sister Betthy, who assisted him greatly with the typing throughout the year of researcho -iii- '•TABLE OF CONTENTS Page LIST Or ±AtjLthj^> •oOooooeooooeoooooooeo oooo.oo*. V Chapter I. THE PROBLEM OF ECONOMIC . DEVELOPMENT AND GROWTH IN LATIN AMERICA 1 -II. THE ROLE OF FOREIGN INVESTMENT IN THE ECONOMIC DEVELOPMENT AND GROWTH OF LATIN AMERICA oooeoeo.e.ooooaooooo 31 III. -THE ROLE OF FOREIGN TRADE IN THE ECONOMIC DEVELOPMENT AND GROWTH OF XJCV X JLi\ o.oooeooo«oo*o*e.oo.o«oo*o«o.oo / TT IV. BASIS FOR A SUSTAINED'ECONOMIC. DEVELOPMENT AND FUTURE ECONOMIC GROWTH OF THE LATIN AMERICAN NATIONS.. 98 BIBLIOGRAPHY . 113 ii.x JTJSIJXJ-LA. JJ, • •.eoooeooo.o .oooeooeoooo* •• •• • • • • . e -L<^D 1. Table of important data about each Latin American Nation •••••••••••••••. 125 2. Map of Latin America- a. South. American Grouping e.......o« 135 bo Central American and Island GrOUpin^ e o o o o » .ooeoe*. • ..•* o c « e « e JLOOJ- APPENDIX B ..................... .•.............. 137 : 1. -■ Latin America j Exports, Imports and the Capacity to import ......o 137 -iv- LIST OP T&BLES Page I. OWNERSHIP OF INVESTMENTS IN LATIN AMERICA, 1913 35 IIo MEXICAN COST OF LIVING SAMPLES, I /y C~loy 1' eeooo.oee o o o • . « e o « • ... .... « • . o ug IIIo He So PRIVATE INVESTMENTS IN LATIN AMtiKJLLA, loy /""iy4U eeee.ee. ..««•. •....see-. 4«0 IVe Ue S-e DIRECT INVESTMENTS IN LATIN AlViiuri J.UA , Xt7 <&y —J.y 4U ee..eee.ee.oe..e«.«oeo 4u Vo U. Se DIRECT INVESTMENTS IN LATIN AMERICA BY COUNTRY, 1929, 1936, 1943, iy OU, iy OC> f AJNiJ iy OO • e o e o o e e .oe.ee.e o • e o 44 Vie Uo Se GOVERNMENT LOANS AND CREDITS TO i-iA -L -L1M AMiiiil jLUxi oee.e.«.ee.eeee.ec.e«.«««oo 4/ Vile MOVEMENT OP EXTERNAL CAPITAL IN LATIN AMERICA, 1945-1953 ...o 48 VIIIo U. Se DIRECT CAPITAL OUTFLOW AND REINVESTED EARNINGS IN LATIN AMERICA, Xy4O**Xy0O ee.eeeoeee.eeeeee.e.. •...««•*« O DU IXe NET Ue Se DIRECT INVESTMENTS, INCLUDING REINVESTED EARNINGS, IN LATIN AMERICA BY INDUSTRIES, 1946-1953 oe .......... e. .<> 51 Xe U* Se DIRECT INVESTMENTS IN THE LATIN AMERICAN REPUBLICS,. BY MAJOR -LJNDU O lKIiio, iy 04 • oeee.oeooeeeeeeoeoeee.o D«C XIo NET CREDITS AUTHORIZED BY THE EXPORT- IMPORT BANK TO LATIN AMERICAN. COUNTRIES, JULY 1, 1945 TO JUNE 30, 1954 ••••••.<•••• 53 Xlle Ue Se INVESTMENT POSITION IN LATIN AMERICA (END OF"YEAR DATA) ••••••••.•••.• 54 -v- LIST OP TABLES - Continued XIII. EARNING ON. Uo So S^UITY IN DIRECT INVESTMENT IN LATIN AMERICA, AS-A PERCENTAGE OP U. So EQUITY, 1950 AND iy55 eeoeo oooQ««ooo»oooac©ooo«e««» • « o . 55 XIVo IBRD LOANS rI0 LATIN AMERICAN COUNTRIES JUKOUuxi JiiN o 51) jJoOU ooooo.ooooeooo.oe.o o o 57 XVo TOTAL BRITISH INVESTMENTS IN LATIN AMJlK X Oil , JL v7 LO , iy idy , iy Oy ooeoeoeooo©.© « o o o &9 XVIo FUNCTIONAL COMPOSITION OF BRITISH CAPITAL IN LATIN AMERICA, PERIOD 1913-1939 . 62 XVII. TOTAL UNITED STATES INVESTMENTS IN LATIN JaMjuiit -LUA , - J.y J.«5 ooe«eooeeeo*oooooeoooooeo o o c o DO XVIIIo TOTAL UNITED STATES INVESTMENT IN LATIN JiMiiiV ±. VA, Xy <vV7 oooeoeoeoeoeoo.ooo.o.eoeoooe DO XIX* UNITED. STATES DIRECT AND PORTFOLIO INVESTMENT IN LATIN AMERICA, 1936, 1940 .. 66 XXe FUNCTIONAL COMPOSITION OF Uo S. DIRECT INVESTMENT IN LAT IN AMERICA 68 XXI*- RELATIVE POSITION OF PRINCIPAL COMMODITIES IN THE EXPORT TRADE OF ,,; LATIN. AMERICAN COUNTRIES, 1938 (BY VALUE)'. • .79 XXIIo ? FOREIGN TRADE OF THE LATIN. AMERICAN KJii UJDLI^O, iyoO*"iy4o ooooooo.oooeoo.ooseooo 0<& XXIII*' LaTIN'AMERICA2 ' INDICES" OF INDUSTRIAL" " ' : * :, -, k -,, IRODUCTIO& (1950 -100) . •'••••••»•.••••.•••• » o 0 85 XXIV*- NATIONAL INCOME IN. NATIONAL CURRENCIES, IN Uo So DOLLAR EQUIVALENTS, AND IN ... •*, " s. ,- DOLLARS PICK Cft, FI To. oooooo«oeooe«.»o«*««.««e y ^ -vi- CHAPTER I THE PROBLEM OP ECONOMIC DEVELOPMENT AND GROWTH IN LATEST AMERICA Consideration of the economic development and growth, of any region is complicated by questions of concept and terminology© Much has been written concerning these matters, but these questions remains What is economic growth? What is its relationship to economic development? Is it possible to have the one without the other? Most writers have tended to use the two terms interchangeably© It is the point of view of this essay that this practice is mistakeno Through economic development the economic, social, and political institutions which form the basis of any economy's expansion and growth are establishedo Although development takes place most of the time in a dynamic economy at a rapid rate, in its early stages it takes shape slowlye Each insti- tution continually attracts elements to itself from other institutions which contribute to its development Through a combination of new and old ideas, which usually arise out of man's dissatisfaction with his present environment, or out of curiosity about what may lie in the unknown, come innovations which constitute the first steps toward economic development© But human activity has meaning and purpose only in terms of -2~ beliefs and aspirations- of a group© Hence, the sum of the aspirations, thoughts and beliefs of men in groups brings "about the establishment of the social and political insti- tutions which form the important part of the process of economic developmento Initial changes in methods require that some groups in society have the will and the authority to install and diffuse new ideas leading to the understanding of new production techniques* for economic growth to be sustained, it is necessary that leading groups expand in authority and that society as a whole respond affirmatively to their leader- ship© Social and political institutional changes must per- petuate an initial increase in the scale of investment and permit the regular acceptance and absorption of innovations© Thus, economic development is the forming of the main economic and non-economic institutions which are the basis of economic growth© Economic growth is the result of this development and cannot take place without ito Itour types of economic development may be distinguished© Th© first of these- I have- designated ^expontaneous" or natural© It is the result of the free movement of individual forces© ■ The second is "deliberate,* or premeditated development which*depends upon a plan of action devised and administered by some authoritative group© The third is "accidental,* or Expontaneous is used here to mean spontaneous, but to be differentiated or to imply "everyone on their and for their aiQo* < >.,-.--'.» J. -3- unexpected development© The fourth type will be known as "parasitic,1*-or regressive development, indicating that it is the result of the negligence or ignorance of the responsi- ble authorities© Expomtaneous development receives its impulse from individuals who, independently, form business organizations and invest money with a view to profito The individual does not think of, nor care about, his contribution