How should one look upon the role of the state in the economies in Latin America? The answer will certainly influence the criteria for success or for failure used in an evaluation of state-enterprise performance. My premise is that cultural traditions in Brazil and in many countries of Latin America support a much more activist economic role for the state in Latin America than in the Western market economies. An important concern in Latin America has been that an increased scope of free-market forces will lead to undesirable results when, as is the case so frequently, the starting point is one of tremendous inequalities in the distribution of income, wealth, and education between various social groups. In Latin America, privileged domestic elites have traditionally monopolized these economic advantages, so one fear has been that these same elites would benefit disproportionately from a capitalist economic system that placed maximum emphasis on the selfish pursuit of material benefits by individuals. A parallel fear has been that a free-market system operating in the global economy would, for analogous reasons, work to concentrate wealth and resources in the hands of a relatively small number of already wealthy nations while working to ensure the permanent impoverishment of more backward economies and societies simply because more developed countries are richer and more technologically advanced from the beginning.

Understanding this basic mistrust of the market system helps the observer realize the reasons for the many forms of Latin American government intervention in both the domestic economy and the external trade sector.