[Other issues related to this development regime…
- Government felt compelled to borrow as much as possible from external sources (plus to print money to pay their domestic bills => often led to hyperinflation).
5- Levels of efficiency in the new industrial plants were sometimes rather low:
Limited size of the home market … couldn’t attain economies of scale (especially true in Central America).
Many producers used technology designed to produce high volumes of output (higher than Latin American countries could support).
- Problem made worse because the technology incorporated in domestic industry was often capital-intensive even though more labor-intensive techniques were available.
- Many firms operated at capacity levels below 50%!