<P> The debt crisis of 1982 was the most serious of Latin America's history . Incomes and imports dropped; economic growth stagnated; unemployment rose to high levels; and inflation reduced the buying power of the middle classes . In fact, in the ten years after 1980, real wages in urban areas actually dropped between 20 and 40 percent . Additionally, investment that might have been used to address social issues and poverty was instead being used to pay the debt . </P> <P> In response to the crisis, most nations abandoned their import substitution industrialization (ISI) models of economy and adopted an export - oriented industrialization strategy, usually the neoliberal strategy encouraged by the IMF, although there were exceptions such as Chile and Costa Rica, which adopted reformist strategies . A massive process of capital outflow, particularly to the United States, served to depreciate the exchange rates, thereby raising the real interest rate . Real GDP growth rate for the region was only 2.3 percent between 1980 and 1985, but in per capita terms Latin America experienced negative growth of almost 9 percent . Between 1982 and 1985, Latin America paid back US $108 billion . </P> <P> Before the crisis, Latin American countries like Brazil and Mexico borrowed money to enhance economic stability and reduce the poverty rate . However, as their inability to pay back their foreign debts became apparent, loans ceased, stopping the flow of resources previously available for the innovations and improvements of the previous few years . This rendered several half - finished projects useless, contributing to infrastructure problems in the affected countries . </P> <P> During the international recession of the 1970s, many major nations and countries attempted to slow down and stop inflation in their countries by raising the interest rates of the money that they loaned, causing Latin America's already enormous debt to increase further . In between the years of 1970 to 1980, Latin America's debt levels increased by more than one - thousand percent . </P>

What caused latin american dependence on western nations