Challenges of Interwar Latin America

Challenges of Interwar Latin America

United States Good Neighbor Policy


Latin America experienced a significant turn in the middle to early 20th century. The majority of this turn was because of economic policies such as the Bracero Program and Import Substitution Industrialization. In many parts of the Latin American culture saw also a cultural and political programs.


Learning Objectives

  • Evaluate the role of World War II on Latin America.
  • Analyze the responses of Latin American leaders to the United States in the interwar period. 
  • Evaluate the Good Neighbor Policy on Latin America. 


Key Terms / Key Concepts

Bracero Program: a series of laws and diplomatic agreements initiated on August 4, 1942, that guaranteed basic human rights and a minimum wage of 30 cents an hour to temporary contract laborers traveling from Mexico to the United States


The Good Neighbor Policy


Manifest Destiny from the 19th century put forward a unique relationship that the United States was centrally interested in Latin America as a site of expansion and growth. Throughout the late 19th to early 20th centuries, Latin America was seen by the United States as part of a broader cultural and economic sphere. Latin American countries were to adhere to US policies and ideas. This is best illustrated with Cuba: the relationship established with the United States in the Cuban Constitution allows the United States to go to Cuba at any time they feel is necessary.

The interwar period changed this relationship between Latin America and the United States. Following World War I, the United States followed a policy of isolationism. President Franklin Delano Roosevelt’s administration changed this, when they started pushing for a policy known as the Good Neighbor Policy. The premise behind the policy was that a good neighbor does not go into someone’s house and try to fix problems; instead, a good neighbor will stand at a point and tell you that there are problems in your home. This resulted in a unique relationship between the United States and Latin American states.

The Good Neighbor Policy meant that Latin American states began to find a rhythm and rhyme that worked better for their own people and governments, as there was far less external pressure to deal with. The freedom to explore what made policy sense in Argentina or Cuba, without United States or other foreign interference, meant the development of unique policy goals in each of these states. At this juncture, many Latin American states experienced the opportunity to grow their own ideas and agendas.

The Good Neighbor Policy came about because of the economic downturn of the Great Depression, a depression that also affected Latin American nations. Many of the Latin American states suffered economically. Mexico, for example, struggled to find ways to find money and resources throughout this period. Chile and Peruvian goods did not find markets in this 1930s. While there was a bit of openness in culture and economics that happened in the 1930s, this was limited in scope and scale due to the economic collapse of the Great Depression. Though, out of that catastrophe came a unique economic model that many Latin American countries began to move towards.

In the colonial and 19th century period, Latin America was the site of production of raw materials to sell directly to Europe. This meant that Brazil grew massive amounts of coffee and sugar to sell to European markets. Bananas from Central America were sold directly to consumers in North America and Europe. While Europeans often were selling higher end finished products in return. The industrialized worker of Germany, for example, would sell machine guns to Chile. The problem is that these raw products were relatively cheap in comparison to the finished product’s price. This imbalance of trade caused a problem, because as more finished goods became a part of the market, Latin American states were struggling to keep up with purchasing them. The problem is how expensive cars would be while bananas are very inexpensive, this would mean that there was many bananas that it would take to purchase a car.

The limits of interference of US government meant that Latin America could start to explore how to make and manufacture their own materials. Many Latin America economists started to critically think about how to change this system of trade imbalance during the interwar period. Economist Raúl Prebisch began exploring the idea of Latin American governments pushing consumers to change their trade behaviors. The policy that Prebisch began to call for is known as Import Substitution Industrialization, or more commonly ISI.  Prebisch argued that instead of buying finished goods, Latin American governments should start buying the machines to make their own finished goods. This would mean that, instead of buying cars from Italy or Germany, Argentines would buy the machines to make their own cars. This shift was an important one because this became the model of Latin American governments throughout the 1920s and 30s.


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