The Great Depression of the 1930s caused political instability in many Latin American countries that led to military coups and militaristic regimes (see Chapter 5). But it also helped transform Latin America from a traditional to a modern economy. Since the nineteenth century, Latin Americans had exported raw materials, especially minerals and foodstuffs, while buying the manufactured goods of the industrialized countries, particularly Europe and the United States. Despite a limited degree of industrialization, Latin America was still dependent on an export-import economy. As a result of the Great Depression, however, exports were cut in half, and the revenues available to buy manufactured goods declined. In response, many Latin American countries encouraged the development of new industries to produce goods that were formerly imported. Due to a shortage of capital in the private sector, governments often invested in the new industries, thereby leading, for example, to governmentrun steel industries in Chile and Brazil and petroleum industries in Argentina and Mexico. In the 1960s, however, Latin American countries were still dependent on the United States, Europe, and now Japan for the advanced technology needed for modern industries. To make matters worse, poverty conditions in some Latin American countries limited the size of domestic markets, and many countries were unable to find markets abroad for their products. These failures resulted in takeovers by military regimes that sought to curb the demands of the new industrial middle class and a working class that had increased in size and power as a result of industrialization (see Map 10.1). In the 1960s, repressive military regimes in Chile, Brazil, and Argentina abolished political parties and turned to export-import economies financed by foreigners while encouraging multinational corporations to come into their countries. Because these companies were primarily interested in taking advantage of Latin America’s raw materials and abundant supply of cheap labor, their presence often offered little benefit to the local economy and contributed to the region’s dependence on the industrially developed nations. In the 1970s, Latin American regimes grew even more reliant on borrowing from abroad, especially from banks in Europe and the United States. Between 1970 and 1982, debt to foreigners increased from $27 billion to $315.3 billion. By 1982, a number of governments announced that they could no longer pay interest on their debts to foreign banks, and their economies began to crumble. Wages fell, and unemployment skyrocketed. Governments were forced to undertake fundamental reforms to qualify for additional loans, reducing the size of the state sector and improving agricultural production in order to stem the flow of people from the countryside to the cities and strengthen the domestic market for Latin American products. In the 1990s, the opening of markets to free trade practices and other consequences of the globalization process began to exert a growing impact on Latin American economies. As some countries faced the danger of bankruptcy, belt-tightening measures undertaken to reassure foreign investors provoked social protests and threatened to undermine the precarious political stability in the region. Other factors have also played important roles in the history of Latin America since 1945. The Catholic church had been a powerful force in Latin America for centuries, but its hold over people diminished as cities and industrial societies developed. Eventually, the church adopted a middle stance in Latin American society, advocating a moderate capitalist system that would respect workers’ rights, institute land reform, and provide for the poor. Some Catholics, however, took a more radical path to change by advocating a theology of liberation. Influenced by Marxist ideas, advocates of liberation theology believed that Christians must fight to free the oppressed, using violence if necessary. Some Catholic clergy recommended armed rebellions and even teamed up with Marxist guerrillas in rural areas. Other radical priests worked in factories alongside workers or carried on social work among the poor in the slums. Liberation theology was by no means the ideology of the majority of Latin American Catholics and was rejected by the church hierarchy. Nevertheless, the Catholic church continued to play an important role in Latin America by becoming the advocate of human rights against authoritarian regimes. The United States continued to cast a large shadow over Latin America. In 1948, the nations of the region formed the Organization of American States (OAS), which was intended to eliminate unilateral action by one state in the internal or external affairs of another state, while encouraging regional cooperation to maintain peace. It did not end U.S. interference in Latin American affairs, however. The United States returned to a policy of unilateral action when it believed that Soviet agents were attempting to use local Communists or radical reformers to establish governments hostile to U.S. interests. In the 1960s, President Kennedy’s Alliance for Progress encouraged social reform and economic development by providing private and public funds to elected governments whose reform programs were acceptable to the United States. But the Alliance failed to work, and when Marxist-led insurrections began to spread throughout the region, the United States responded by providing massive military aid to anti-Communist regimes, regardless of their nature.