MANMOHAN SINGH, Finance Minister, 1991-1996: If you have a controlled economy, cut off from the rest of the world by infinite protection, nobody has any incentive to, in a way... nobody has any incentive to increase productivity, to bring new ideas. NARRATOR: Overprotected, over-administered, overplanned, the Permit Raj was quite literally a brake on the Indian economy. back to top Chapter 5: Latin American Dependencia [2:03] (tango music) Onscreen title: Latin America NARRATOR: In Latin America, radically different leaders shared India's suspicion of the world economy. In the 1940s and '50s, it was Juan Peron and his wife, Evita. In the 1960s, it was communist Cuba's charismatic Fidel Castro. And in the 1970s, it was Chile's Marxist president Salvador Allende. Though rich in raw materials, Latin America seemed doomed to perpetual poverty. The dependency theory of economic development seemed to offer a way out. DANIEL YERGIN: The dependency theory said that if you want to get high economic growth in your country, what you need to do is put up barriers, tariffs that restrict the flow of import into the country, develop and build your own domestic industries, and that if you don't do that, you're going to be victimized by world trade.
The theory was very attractive. It said you would develop on your own, and you would be more self-sufficient. The reality is that you cut yourself off from flows of technology, flows of investment, from flows of know-how, and instead of getting ahead you were falling back. MOISES NAIM, Editor, Foreign Policy Magazine: Because they are not threatened by competition, you create very lazy, noncompetitive companies that produce not very good goods at higher prices. It may create jobs here and there, but in the long term it may create even more poverty. back to top Chapter 6: Counterrevolution in Chile [3:30] Onscreen title: Santiago, Chile NARRATOR: By the early 1970s, Latin American economies were in trouble. Chile elected the Marxist president Salvador Allende. Allende's solution was not less government intervention, but more. Businesses were nationalized or expropriated. Price controls were imposed. Civil unrest grew as the economy spun out of control. RICARDO LAGOS, President, Chile: We have a tremendous inflation. Chilean society became extremely polarized. It's true it was polarized before Allende, but during Allende's period the society was extremely polarized. NARRATOR: It all ended in a military coup. As air force jets straffed the presidential palace, Allende was trapped inside. This was the last picture taken of him alive. Allende supporters, union leaders, and left-wing students were rounded up in the national football stadium. Hundreds were never seen again. Chile's military junta was led by Gen. Augusto Pinochet. Many middle-class Chileans saw him as a savior.