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• The causes presented in the literature of the middle-income trap are generic, emphasizing the quality of the legal institutions of the country, demographic problems, the lack of social infrastructure, poor macroeconomic policies, etc. were already present in developing countries when they were growing fast. Besides, the income interval used on the studies on the trap was too large. • Instead of promoting the growth, the liberalizing reforms, which were more radical in Latin America than in Asia, caused an increase in the interest rate and dismantled the mechanism that neutralized the Dutch disease – both facts leading to the chronic overvaluation of the exchange rate, which represented a competitive disadvantage of the companies utilizing the best technology available. • In the economic literature, it is well established that the currencies of the commodity-focused economies tend to be appreciated in the long run because they face the Dutch disease. On the other hand, central banks in the region tend to define a high interest rate around which they organize their monetary policy so as to attract foreign capital and "grow with external savings" – this representing a second major cause of overvaluation of the national currencies of Latin American countries. • The main conclusion of the research is that, in the period of 1980–2016, the Latin American countries didn't fall into middle-income but a liberalization trap; the reason why they have fallen into quasi-stagnation while Asian countries did not lie in the liberal reforms. Opening trade in countries that have the Dutch disease meant dismantling the pragmatic mechanisms that neutralized it; financial liberalization limited the ability of countries to control distorted flows of capital and created conditions for the increase in the interest rate. • The instrument to neutralize the Dutch disease on the domestic market side were import tariffs on manufactured goods. To the extent that they were just neutralizing the Dutch disease, they were not protectionist – they were just giving the local manufacturing industry equal conditions of competition with the companies of other countries. If the import tariffs on manufactured goods were higher than what was required to neutralize the Dutch disease, they would be also protectionist. This paper offers an alternative explanation to the slow-down observed in the growth of developing countries. Instead of a middle-income trap what happened was a liberalization trap. Growth didn't happen because countries turned middle-income, but happened in a given period, around the 1980s, when these countries faced a serious foreign debt crisis and were constrained to open their economies. The studies on the middle-income trap have adopted a broad income interval and were unable to offer new historical facts that explained why these countries stop growing fast. Differently, this paper shows that the trade liberalization and the financial liberalization that started in the 1980s involved the dismantling of the mechanism that neutralized the Dutch disease and the change from low to high interest rates – both facts leading to a long-term or chronic overvaluation of the exchange rate that made the manufacturing industry non-competitive and caused deindustrialization and low growth. [ABSTRACT FROM AUTHOR]

This paper first presents some basic ideas and models of a structuralist development macroeconomics that complements and actualizes the ideas of the structuralist development economics that was dominant between the 1940s and the 1960s. A system of three models focusing on the exchange rate (the tendency to the cyclical overvaluation of the exchange rate, a critique of growth with foreign savings, and new a model of the Dutch disease) shows that it is not just volatile but chronically overvalued, and for that reason it is not just a macroeconomic problem; as a long term disequilibrium, it is in the core of development economics. Second, it summarizes "new developmentalism" - a sum of growth policies based on these models and on the experience of fast-growing Asian countries. [ABSTRACT FROM AUTHOR]