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Chapter 4 considers the shift of Latin America, in the wake of major global shocks, toward State-led industrialization. This new development pattern, dominant in the large and mid-sized economies, was characterized by a focus on industrialization, a significant expansion of the role of the State and an orientation toward the domestic market; the latter feature tended to change with the opportunities to export manufactures and renewed access to private external financing since the mid-1960s. Most small economies superimposed these patterns on persistent export-led growth. After a transitional stage of slow growth during the Great Depression and the Second World War, Latin America experienced up to 1980 the fastest economic and productivity growth rates in history, a population explosion and rapid urbanization. Particularly during the second phase, human development accelerated and there was the fastest reduction in poverty in the twentieth century, though with diverse trends in income distribution.

This chapter traces Russia's financial reforms in the late nineteenth century. It puts the reforms associated with Sergei Witte's tenure as finance minister from 1892 to 1903 in a broader context, and also highlights key strategic errors made during his tenure. As the chapter shows, Witte, more than any other figure in Russia or the West, is associated with the boom in Russian investment in the late nineteenth and early twentieth centuries. During his tenure as finance minister, Russia adopted the gold standard in 1897 and repeatedly turned to the foreign capital markets for loans to finance an ambitious program of state-led industrialization. His name was similarly associated with the boom in Russian railroad construction, the Trans-Siberian Railway in particular—an association that began in his earliest days while working in the railroad industry, first in the private sector (initially as a lowly conductor to learn the business) and then in government.

What befalls economies that descend into violence? This chapter suggests that the splintered trade networks described in Chapter 2 effectively forced firms in Liberia to localize many of their inputs and to internalize many of the functions that would otherwise be external—imitating the effects of import-substitution and state-led industrialization policies. Specifically, the war economy in Liberia mimicked import tariffs, localized the staffs of many companies, raised local content in products, and even spurred technical learning and knowledge accumulation. In calling attention to ways in which violence localized supply chains, this chapter suggests that the interplay between violent predation is itself a reaction to the structure of global value chains.