NAFTAs Future? — The Logic of Puerto Rico's Export‐Led Development

Abstract

East Asian industrializations and the crisis of Latin American developmentalism in the 1970s and 1980s have been at the center of disputes over the conditions leading to a socially optimal extension and intensification of capitalist production relations in the periphery. The contrast in regional styles and outcomes of development is deemed to be the key to a final adjudication between the competing analytical claims of neoclassical economists and statist currents within political economy. Neoclassical critiques of excessive Latin American tampering with markets find confirmation for neoliberal prescriptions in the open, export‐oriented East Asian regimes. That East Asian development is not a paragon of neoliberal virtue, and that relatively freer markets might not be the most important part of the story, is the crux of the enduring statist critique. Over a decade of contestation has given way to significant refinements, among them, a recognition of the importance of sequencing import‐and export‐substitution. The modicum of foresight and discipline that seems to be implied in proper sequencing has weighed in favor of the statist emphasis on the role of ‘developmental states.’ Even researchers disposed to enshrine the virtues of markets in the process of modernization, find it difficult not to concede that the East Asian record rests on more than macroeconomic stability; although they remain skeptical about the cruder claims of states successfully ‘picking winners and losers’ (Dollar and Sokoloff 1994). Perhaps the most enduring legacy of this controversy—only extreme zealots could deny this—is the mounting empirical evidence supporting the argument that economic development is an inherently discontinuous process, and reliance on the market institution leaves societies woefully unprepared to ‘negotiate’ through an unstable and asymmetrical international political economy.