LOSERS^493preneurially needy. This pattern of arrested development reflects the
tenacious resistance of old ways and vested interests. In particular, the
apparently rational focus on land and pastoralism (long live compara
tive advantage!), reinforced by social and political privilege, bred pow
erful, reactionary elites ill-suited and hostile to an industrial world.
This disjuncture, when combined with social discontents—so many
poor—invited antidemocratic, though populist, solutions (caudil-
lisnio), terrible when durable, destructive when fragile.
So industry came late. This need not be a handicap; lateness has its
advantages. But everything depends on the quality of enterprise and
the technological capability of the society. In most of Latin America,
industry came in under the shelter of import substitution: high tariffs,
discriminatory legislation and regulations, nontariff barriers to imports.
As we know from American experience in the nineteenth century and
Japanese in the twentieth, such measures may work in a context of en
ergetic emulation, of exigent, world-level (export-capable) standards,
of domestic competition. In Latin America, this impulse was largely
wanting. Not everywhere. Some industry is on the cutting edge. But
most is well behind the frontier, panting behind protective walls.
This protection has been justified by national interest or by anti-
colonialist ideologies that, if pushed to their logical conclusion, would
suggest an end to all exchange with the more advanced industrial na
tions abroad. (Latin America has been a field of dichotomous per
spective: center vs. periphery, neocolonialists vs. victims, bad guys
against good.) Fortunately, that has not happened. Such exercises in
pure reason (or unreason) are more suited to scholars' studies than to
the halls of government, as President Cardoso of Brazil, once a flag-
bearer of the dependency school, has now discovered.
We should not underestimate the importance of that discovery: just
because something is obvious does not mean that people will see it, or
that they will sacrifice belief to reality. In the effort to have things both
ways, or every way, to appease old interests, to encourage new, to keep
the foreigner away while bringing him in, most Latin nations have re
sorted to the manipulation of trade and money: import barriers and
quotas, differential rates of exchange, a carapace of restrictions that
some have called the "inward-looking model"—and, of course, to bor
rowing.^2
Such measures can provide temporary relief, but at a heavy price:
constant adjustments, currency black markets, runaway inflations, high
transaction costs, a chilling of foreign investment. Even so, some Latin
American countries were able to borrow ridiculously large sums from