for industrialization through the development of import-substitution industries. Meanwhile, their incorporation into the network of world economy meant that these economies increased the degrees of dependence on exports of primary commodities. As a result, their currencies were overvalued and as the governments of these countries provided low-interest loans and subsidies to the import-substitution industries, the resultant progress in industrialization created the problem of pushing up wage levels. Moreover, the long history of increasing dependence on the advanced industrial countries for capital, technology and raw materials spread among the people a negative view on the relations of their economies to the world economy. Some even held the view that the slow development in their countries could be blamed on their participation in the world economy.

The second characteristic is the high degree of dependence on the public sector, and marked imbalance in the distribution of assets and income. The governments were held responsible not only for the building and maintenance of infrastructure but also for the implementation of measures to foster import-substitution industries. The heavy dependence on the public sector resulted in huge budget deficits. According to Gustav Ranis, the inequality in the distribution of assets and income has resulted in rent-seeking activities and led to the dependence on the public sector and the adoption of misguided policies.

Completion of the development of import-substitution industries

Volkswagen started operations in Brazil in 1953 and in Mexico in 1960. General Motors started operations in Brazil in 1959. These examples show that multinational corporations continued to aggressively expand into Latin America after World War II. The Central American Common Market (CACM) and the Latin America Free Trade Alliance (LAFTA) were established in 1961. Their objectives were to realize integration of regional economies and to establish a system of division of labor within the region. The maquiladora zone in Mexico started in 1966. Latin America saw the expansion of multinational corporations and the organization for regional alliance was in place. Because of this situation, the level of industrialization of Latin American countries was high (Table.3) and the share of exports of industrial goods continued to increase, and it was believed that the development of import-substitution industries in Brazil, Mexico and Argentina had been completed.

However, such view is questionable. Is it correct to view that the development of imports substitution industries has been completed? In the flying wild geese development theory, it is believed that imports of new products from abroad give impetus to domestic industry, prompt domestic businesses to produce competitive products, and foster the capacity to compete with imports. Furthermore, these businesses will become internationally competitive and begin to export. That is to say, that the development of import-substitution industries is only a one step in fostering international competitiveness. The manufacturing of TV sets substitutes imports in some countries, while it can become export industries in others. There are no industries per se which can be called import-substitution industries or export industries. Only the industries that are internationally competitive are suitable to be called export industries. The view that the development of import-substitution industries has been completed only suggests that the country has achieved the development of an industry which is not yet internationally competitive. This would be acceptable if the objective of a