Protectionism and the Internationalization of Capital: U.S. Sponsorship of Import Substitution Industrialization in the Philippines, Turkey and Argentina

Abstract

Conventional analyses of the economic policies of Third World states ignore the U.S. role in sponsoring import substitution industrialization (ISI) in these countries after World War Two. This protectionist development policy usually is considered as a project only of Third World nationalists. Ironically, the independent U.S. initiative to promote ISI came from those generally most associated with liberal trade policy: the executive branch of government and internationalist business. Big business benefitted as long as they could invest behind the ISI tariff barriers. They hoped that ISI would be only a temporary program until global economic equilibrium and growth could be restored in the aftermath of the war. However, the U.S. continued to support ISI throughout the 1950s because until recently the resistance of protectionists in the U.S. made it difficult to reduce U.S. tariffs sufficiently to induce developing countries to rely on externally driven growth. Import substitution industrialization (ISI) in the Third World is usually considered a nationalist development strategy. The adoption of this strategy is explained by the situation of Third World states in the international system or by domestic political factors. These traditional treatments ignore the role of the U.S. in sponsoring ISI in the Third World. After World War Two, U.S. technical aid missions were sent to Authors Note: The authors are listed in alphabetical order. Nolt was primarily responsible for the Philippine and Turkish cases, and Maxfield for the Argentine case. Maxfield would like to thank the Institute for the Study of World politics, the Center for U.S.-Mexican Studies, and the Kellogg Institute for International Studies for their financial support during the research and writing of this paper. Timely grants to both authors from the Eisenhower World Affairs Institute funded a trip to the Eisenhower library. The archival staffs at the Eisenhower and Truman libraries and the National Archives, and Jee-Hye Park assisted our research. We are grateful for incisive comments on earlier drafts from Jeff Frieden, Gary Gereffi, Judith Goldstein, Joanne Gowa, Stephan Haggard,