In Asia the tightly regulated Chinese economy and the less tightly regulated, but still centrally directed, Indian economy both began to show worrying signs of stagnation by the mid-1970s,95 forcing governments to look for alternatives; in Latin America the import-substitutionist model was found wanting in its Argentinian homeland as economic and political crises erupted; in Africa the promises made by proponents of "African socialism" were not fulfilled as industrial growth was restricted by the narrowness of national markets and the meagre resources left after the depredations of imperialism. Adding to these problems was a decline in the price on the world market for raw materials and foodstuffs-the main source of the export earnings needed to import equipment for new industries. Particularly after the onset of recession in the advanced countries in 1974, non oil producing Third World countries were caught between increased oil costs and a decline in the terms of trade for primary commodity exports of nearly 50 percent.96
Those running industries which had grown up within the protective barriers of the old model began pragmatically establishing links with foreign capital. Argentina, Brazil and Mexico were typical. Their industrial bases had been established in the 1 940s, 1 950s and 1960s by the state intervening to direct investment in industry, often into state-owned companies. But the more farsighted industrialists-whether in the state or private sectors-saw that they could not get the resources and modern technologies needed to keep up with worldwide productivity levels unless they found ways of breaking out of the confines of the national economy. They began increasingly to turn to foreign multinationals for licensing agreements, joint production projects and funds-and they began themselves to operate as multinationals in other countries.
The trend was reinforced by the success of a number of countries which had long oriented themselves to the world market in achieving very fast growth rates. In Asia four bastions of anti-Communism-South Korea, Taiwan, Hong Kong and Singapore-registered growth rates easily as large as those in Stalin's USSR. And in Europe countries like Spain, Greece and Portugal, which Paul Baran had included as part of the underdeveloped world, grew rapidly enough to join that rich man's club, the European Community. Brazil began following a similar export-oriented path under the military regime that had seized power in 1 964. Its still very large state sector and private capital alike increasingly oriented towards the rest of the world system rather than to a protected national market. The Western financial press rejoiced in this, assuring its readers that Brazil was the great rising Third World country whose industries were destined to challenge those of the West. And there certainly was growth. "For almost 15 years ( 1 965-80) the average rate of growth was 8.5 percent, making Brazil the fourth fastest growing country" .97
218
Capitalism in the 20th Century