A brief history of development theory. From Schumpeter and Prebisch to new developmentalism

Abstract

Classical developmentalism was heterodox economics that showed countries
require a moderate intervention of the state in the economy to industrialize and catch up.
Growth depends on investments and on a satisfying expected rate of profit, which import
tariffs legitimized by the infant industry argument assure. Latin American countries adopted
this industrial policy from the 1950s and experienced high growth rates. But the infant
argument loses validity with time. In the 1980s, under the pressure of the Global North, 
Latin American countries adopted the neoliberal reforms, and are quasi-stagnant since then.
New developmentalism emerged in the 2000s, made the critique of conventional economics,
proposed a new growth strategy focused on a competitive exchange rate, and legitimized the
use of import tariffs with the Dutch disease argument.

JEL Classification: O11; O14; O23; O24.