5-year consistent economic development model

Latin American countries have always been the more developed areas among developing China countries. Argentina's per capita income reached the level of France in 1929. In 195, the per capita income of nine Latin American countries (Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela) exceeded Finland, Austria and Italy, Chile was above Spain, Mexico was close to Spain, and most Latin American countries surpassed Greece, Portugal and Turkey. By 196, some of these countries were still above or equal to Japan. But by 1985, the per capita income of these nine Latin American countries was only 1/3 or even less than that of Japan and medium-sized European countries, and only 1/2 of that of Mediterranean countries. In 1989, the per capita GNP of South Korea was US$ 4,4, that of Brazil was US$ 2,54, that of Argentina was US$ 2,16 and that of Mexico was US$ 2,1. Compared with East Asia, Latin America is obviously backward. From 1965 to 1989, the average annual growth rate of per capita GNP in East Asian countries reached 5.5%, while that in Latin American countries was only 1.9%. The proportion of Latin America in world exports also dropped from 1.9% in 195 and 6.7% in 196 to 4.6% in 198 and 3.3% in 1989.

Latin America's backwardness is inextricably linked with its import substitution development model. Latin America, a development model, came into being in the 193s, took shape in the 195s, and was partially revised in the mid-196s. After the world economic crisis in 1974-1975, it relied on a large amount of foreign loans and remained until the debt crisis broke out in Mexico in September 1982. In the long years of nearly 5 years, the weaknesses and disadvantages of this model have become increasingly exposed, but many countries in Latin America have not implemented bold changes in this outdated development model.

the import substitution model once promoted the economic development of Latin American countries, but since the mid-196s, with the deepening of scientific and technological revolution and the rising trend of economic internationalization, it has hampered the further development of Latin American economy.

① Emphasis on protectionism and lack of competition awareness. It focuses on providing special preferential treatment to domestic manufacturers, and sets up 1/2 tariff and non-tariff barriers to competing imported products to protect the relative prices of domestic industrial sectors. Domestic manufactured goods produced under the condition of "greenhouse" are not only of high cost and inferior quality, but also difficult to enter the international market. In order to maintain its survival and development, it imports a large number of raw materials and intermediate products from abroad and consumes a lot of foreign exchange. Because the development speed of the export sector of primary products providing foreign exchange lags behind that of the import substitution industrial sector consuming foreign exchange, Latin America's international balance of payments has been unbalanced for a long time and can only be made up by borrowing foreign funds.

② the low exchange rate policy causes price distortion. It has long used administrative means to make the exchange rate deviate from the currency exchange ratio based on purchasing power, resulting in the overvaluation of the domestic currency. This practice has not only caused high consumption, but also brought inflation. Domestic investors transfer a lot of money abroad for fear of devaluation. Throughout the 198s, the capital fleeing from Latin America was around $2-$22 billion.

③ excessive state intervention. The economic function of Latin American countries has developed from indirect intervention to direct intervention, from general regulation to extraordinary intervention, from market intervention to almost replacing the market. Many Latin American countries have become direct investors and employers in the production of basic industries and daily necessities. In addition to socialist countries, the number, scale and scope of state-owned enterprises established in Latin America are unmatched by other regions and countries in the world. However, most of these enterprises survive and develop by operating at a loss. The deficit of state-owned enterprises in seven Latin American countries accounted for 1/4 of the public sector deficit in the mid-197s, and increased to 1/2 in 198-1981.

it was not until September 1982, when Latin American countries were plunged into a serious social and economic crisis, that they learned from a painful experience and deeply felt that there was no other way but to carry out structural reform on the original development model.