On the Costs of Inward-Looking Development: Historical Perspectives on Price Distortions, Growth, and Divergence in Latin American from 1930s - 1980s

From the 1930s to the 1980s, economic policies in Latin America epitomized the inward-looking model of development. The model emerged in the Depression, and was later codified in unorthodox economic theories. Even though economic performance was seen as disappointing by the 1960s, the distortions of the regime were long lived, persisting and worsening into the 1970s and 1980s. I examine the costs of distortions and explore the structural differences between growth dynamics in Latin America and elsewhere. Distortions had pervasive and profound effects on many aspects of the growth process, and help explain divergent development in the region.