Economic Development in Latin America

Economic development in Latin America has been a matter of great debate since they became independent. In the nineteenth century, Europe and the United States thought the reason why there was a lack of development among Latin American countries was because they were racially inferior and Catholic. In the twentieth century, the reasons advanced was that they are backwards and uneducated.

Latin American countries assert their lack of development is not because of the theories that first world countries put forth, but rather due to the fact that those same countries have stolen much of their mineral wealth and agricultural products during the colonial period. Since their independence, Latin American countries have went through four phases of economic development.Between 1821 and 1880, the first phase consisted of classic liberalism. This type of economy consisted of free trade, and opening the country to foreign investment.

Many of the Latin American countries produced a mono-crop economy, which made them very vulnerable to fluctuations in foreign markets. Classic liberalism did create some economic growth in the form of railroads, telegraphs, port works, and financial institutions. However this type of growth benefited the wealthy only; it did nothing for the lower classes.

As a result of this economic instability, revolts occurred among Latin American countries.The second phase of economic development was import substitution industrialization (ISI). Foreign capitalists were driven out of the countries.

For example, Mexico nationalized oil and railroads, thereby forcing out Standard Oil and Andrew Carnegie. Latin American countries closed their borders and instituted laws that foreigners could not own the majority interest in businesses. The government began subsidizing Latin American businesses, but this plan did not lead to economic prosperity.

By 1959, the countries had minimal development and bad economic problems, such as inflation, poor quality goods at exorbitant prices, and agricultural societies suffering due to the government subsidizing industries and not them. The Cuban revolution caused many Latin American countries to consider their own communist revolution, which instigated President John Kennedy to put phase three into motion.Modernization theorists persuaded Kennedy to help modernize Latin America in the belief that if they did so, the Latin American countries would commit them to capitalism and democracy, and not become communistic.

Promoting health care and education was most important to President Kennedy because Castro was very successful in implementing these two reforms in Cuba. The plan implemented in Latin America was very similar to the Marshall Plan, which had been used for European countries after World War II. The downfall to this phase was that in Latin America they were not re-creating democracy, but rather creating it which was much more difficult.By 1968 this phase was failing and revolutions broke out again. From 1982 to the present, there has been a return to nineteenth century liberalism, called neo-liberalism.

This economic policy includes open markets, foreign investors, and globalism, such as NAFTA. This is similar in many respects to the policies existing in the creation of the European Union, but does not include open borders between the United States and Mexico. The probable reason for keeping the borders closed is that illegal immigrants will work for substantially less than they would if the borders were open. Foreign investment in Latin American countries also benefit the capitalists much more than the people of the countries themselves because the capitalists do not have the same requirements to provide job benefits to those workers that they would have in the United States, such as workman's compensation, health insurance, and minimum wage standards.While I have not determined yet if America should have open borders, I do think that foreign investors should be required to conduct business in Latin America countries the same as they do in the United States. By this I mean the people of those countries should have the same work benefits prescribed by American law to their workers.

By foreign investors neglecting this, they are simply exploiting the workers for their own profits such as was seen in the United States in the beginning of our industrialization.

Writing.Com/ which is a site for Creative Writers.Her writing portfolio can be viewed at http:http://www.Writing.com/authors/ja77521.

By: Mary Arnold