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The Great Depression of the 1930s was a watershed in Latin American development. The crash of 1929 ended the era of export-led prosperity and opened a new decade of import substituting industrialization (ISI) in major Latin American countries. However, the Latin American crisis was not the same kind that the advanced Northern Hemisphere counties experienced since it was an external debt crisis caused by external shocks rather than endogenously created one. Then what does make the 1930 Latin American debt crisis unique and special?This paper focuses on the long-term effect of the great depression that worked indirectly through changes of political and economic institutions. Restricting our analysis to Argentine and Brazilian cases, we explore how the immediate impact of external shocks led to political turmoil and financial collapse and these, in turn, brought the structural changes in political and economic sphere. Specifically, these medium term effects were the ISI and the rise of populist government. And we should take into account the burden of this political legacy when we evaluate the long-term effect of the great depression.