Volume 43, Number 170,
July-September 2012
Emerging Countries:
The Marxism-Institutionalism Controversy
Sergio Ordóñez
Alternative Explanation of the Differences Between “Successful”
and “Lagging” Developing Countries ( ...continuation )

Based on this institutional-hegemonic foundation, the industrialization strategy that consists of substitution imports (isi) is developed, fostered by public investment with multiplicative effects on industrial production for the internal market.

An attempt to solve the lack of industrial competitive advantages, which began in the 1950s, required going from a stage of full development of isi by substituting agro-mining exports for industrial products, a process that only took place partially for Latin American countries, insofar as the following changes to the hegemonic group were needed, and did not come about: (1) rise of the new industrial bourgeoisie and a new alliance with the agro-mining-exporting bourgeoisie in terms of the new objective of generating industrial competitive advantages, to constitute a new hegemonic group under the management of the former; (2) the displacement of the old hegemonic group of landowners and the agro-mining-exporting bourgeoisie to a subordinate position as an allied group, and a break of the alliance between both in the terms stated that principally relegated landowners; (3) The previous two would open the possibility to revamp the commitment between classes and subordinated groups in terms of a more decisive incorporation into the distribution of economic surplus by way of three-way corporate negotiation, to the detriment of intermediate groups that, unlike in developed countries, had previously had an important role up to that point in the distributive process;32 and (4) All of this would have conferred a new economic character on the block seeking competition, that should subordinate its distributive and rent-earning character.33

Going from export substitutions, which is expressed in the increase of industrial exports in the region’s main countries towards the end of the 1960s and the beginning of the 1970s,34 is thus blocked in the face of resistance from the hegemonic group to undertake previously indicated changes, which is favored by the international situation following the first oil crash, due to increase in international prices for agro-mining raw materials, and as such, their exchange rates with manufacturing products, and the nationalist wave of ruling classes and groups in developing countries that ensued, which was a step towards the offensive for those disputing how to distribute international land rents with ruling classes and groups of developed countries. In that context, the search for industrial competitive advantages that had resolved the lack of isi economic stability was distorted towards agro-mineral exports and obtaining cheap international credit, which, although it momentarily solved the currency problem, did so at the cost of deepening the isi sustainability crisis, due to the tendency to overvalue the exchange rate that the process generated, with which the step towards substituting exports was definitively blocked.

The solution to the conflict in the heart of the hegemonic group was sealed by military regimes of the period that imposed a regressive solution in favor of conserving the old hegemonic group. As such, the “lower” social overflow of the historical block, which subordinated classes and groups initiated at the end of the 1970s, combines with an “upper” overflow, expressed in an organic crisis of the corporate historical block in the region’s countries, which remains unresolved.

32 In the most advanced Latin American countries, there is no commitment to distribution productivity increases in equable terms among real salaries and business earnings as there is in advanced countries. Instead, earnings go up in a greater proportion to real salaries, which allows and makes necessary concurrence of the middle classes as consumers of new industrial products. The substitution of exports would open a new possibility for commitment between companies and unions in terms of increase competitiveness and equable distribution of economic surplus.

33 In Mexico, there was a brief two-year attempt in this sense, following the fiscal and financial crisis of 1976, when tariff barriers to national industry were reduced and the government drove sectorial export substitution programs, like the automotive and electronics industry. This attempt was cut by the oil boom (Ordóñez, 1994).

34 In Mexico, manufacturing exports went from 12% participation in 1960 to 25% in 1970, while raw materials fell from 55% to 38% (even though manufactured foods rose slightly from 30% to 33%) (Ordóñez, 1994), while in Brazil, industrial exports rose from us$1.9 billion to us$6.2 billion (Knox, 2001).

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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