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Patterns of Economic Development

Manufacturing

By the late 1970s manufacturing accounted for at least 25 percent of South America's GDP, up from 20 percent in 1956, when it first exceeded in importance both agriculture and commerce and finance. In the late 1990s, the industrial sector accounted for more than 30 percent of the GDP in Argentina, Venezuela, Brazil, Bolivia, Chile, Peru, and Ecuador.

The processing of agricultural commodities remains the most widespread and important industry, even in Argentina and Brazil, the most industrialized countries. The concentration and refining of minerals is also important but tends to be located near the mineral deposits. Other industries, however—such as petroleum refining, the making of iron and steel and cement, and the manufacture of consumer goods such as textiles, beverages, motor vehicles, electrical and mechanical equipment, and plastics—are concentrated in and near the largest cities.

Industrial development in South American countries has, in the past, taken place with government protection. Although many industries still operate as licensees or subsidiaries of foreign corporations, national governments have, since the 1930s, become directly involved in heavy industries such as iron and steel, motor-vehicle assembly, and shipbuilding. In some countries machine tools, aircraft, and military vehicles are built for export. Industrial development on the continent, however, continues to face several problems: the small size of the national markets, inadequate technology, and weak transportation and distribution networks. Since 1992 the governments of several countries, including Venezuela, Argentina, Chile, and Brazil, have begun selling off nationalized industries for the immediate financial benefits and in the hope of achieving higher efficiency at a lower cost. Such privatization, which has included the transportation and communications industries, has usually resulted in higher unemployment and significant rises in the prices of goods and services.

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