[...] the basis of trade had to be altered . It could not be premised on the idea that some states are naturally good at being harvesters of low-value raw materials and others are naturally proficient at being producers of high-value-added finished products. The theory of comparative advantage, Prebisch claimed, stifles genuine economic development. And further, since modernization theory promotes the view that national income and investment capital must be raised from the export of raw materials, it will only entrap the new nations more deeply. As Prebisch and the development economists saw it, the import of manufactured goods and the export of cheap raw materials will continue to drain capital and fail to enable the conduct of technological improvements toward socioeconomic development. The cycle of dependency would intensify rather than break.
To counter this, Prebisch argued that raw material exporting states should create some mechanism to develop a domestic industry, and absent outright grants, the best approach would be legal-political. The new nations should use tariffs to make imports prohibitive (what be came known as "import-substitution industrialization" or, in another guise, the "infant industry" thesis) . Prices in the core remained high partly because of the political role of trade unions and industrial monopolies. The periphery needed its own political strategy, and this would have to be in the realm of interstate trade.