Interpreting Contemporary Latin America through the Hypotheses of Institutional Political Economy

This article analyzes the weak economic performance of Latin America since the end of the Import Substitution era, emphasizing the structural impediments that led to the dissipation of opportunities for viable economic policies that arose during the latest commodity boom, 2002–2012.The theoretical/analytical framework for this article derives from the developmental hypotheses of Veblen, Gerschenkron, Innis, Abramovitz, Amsden, and Chang. All addressed, in their related but varied approaches, the “catching-up” problématique—with Veblen and Abramovitz analyzing “falling-behind.” In Latin America—the theoretical formulations regarding catching-up have had minimal explanatory power, for reasons explored in the text.Pioneering institutionalists, modern “revisionist” institutionalists (e.g., Amsden) and the Latin American Structuralists (e.g., Furtado and Prebisch) often converged regarding their confidence in the efficacy of rational, operative, developmentalist policies and programs. However, only those drawing from the work of Veblen—including Innis with his analysis of the “staples trap”—seriously considered the “falling-behind” hypothesis.During the latest commodity boom, Latin America’s elite failed to exploit favorable circumstances to diversify from low-value added, volatile, commodity production due to pre-Import Substitution (i.e., nineteenth century) institutional legacies. Endogenous industrialization was fragile, while the agro-mineral-financial export elite was persistent.