Abstract
This chapter aims at a historical and institutional explanation for the industrial development in Latin America. It seeks to unveil the puzzle of industrializing countries in Latin America, moving from a pioneer position among latecomers in the 1930s and 1940s to a stagnant position in the 1980s. The chapter emphasizes the role of fictional expectations and capitalist dynamics and the German Historical School's contribution and more recent contributions of historical institutionalism. It argues that the Import Substitution Industrialization (ISI) had two shortcomings: the changing economic landscape in the 1970s towards trade openness and the role of exports in industrial competitiveness, and not paying enough attention to the financial system in industrial development. It discusses the paradigm of Global Value Chains and its implications in Latin America, arguing that the increase in the world trade through Global Value Chains was a double-edged sword for industrial development in the continent.
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