The Current State of Devlopment in LAtin America

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In attempting to establish the current state of development in Latin America, historical chronology serves as the foundation necessary for a comprehensively logical position. Latin American development has evolved in distinct phases, which lead to the present day standings of the politics and peoples throughout the region.

The culmination of distinct historical attributes: conquest, colonialism, mercantilism, captalism, industrialism, and globalism, serve as the developmental path from the past, to allow an understanding of the current state of development. In overview of this, as perceived by Latin American governments, the four primary areas of concern as reported from the 1994, “Summit of the Americas” held by heads of 34 countries, were as follows:

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  • preserving and strengthening the community of democracies of the Americas,
  • free trade area of the Americas (FTAA),
  • eradicating poverty and discrimination in the hemisphere,
  • education (Americas Net).

Each issue examined by members of the summit involves aspects of politics and economics. The desired changes in Latin American society can be shown connected to these two subject areas, as held by authors Skidmore and Smith, “From modernization theory we take the casual premise that economic transformations induce social changes which, in turn, have political consequences.”(Skidmore and Smith, 10)

The understanding of historical background, an awareness of current political goals, and the incorporation of modern political and social theory allow an increasingly accurate depiction of the state of development in Latin America to be constructed. Development, largely defined as bringing to a more advanced or effective state, stands often as the product of the successful management and collaboration of economic, social, and political areas.

The current state of development should therefore gauge today’s level of success in creating a more advanced and effective state. In considering these criteria, development in Latin America may best be described as progressively transitional, continually improving, yet still lacking stability and permanence in structure. This apparent lack is causing disfunctionalism of governmental bodies to be successfully consistent in altering the povertized sectors of society. The ultimate pattern perpetuates the social stratifications of Latin America, which only continue to erode the workings of development at large. To break such a cycle, successful structural functionalism under governments of stability and permanence must be achieved.

Economics: Economics holds key importance in an array of political and social workings in all areas of the world. The factor making this sector a central component in successful development is that economics often serves as the catalyst between developmental areas. Even in basic terms as proposed in the modernization theory employed by authors Skidmore and Smith, economics alters the society, and this in turn will play a crucial factor in political outcomes,

“ Latin America has occupied an essentially subordinate or dependent position, pursuing economic paths that have been largely shaped by the industrial powers of Europe and the United States. These economic developments have brought about transitions in the social order and class structure, and these changes in turn have crucially affected political change.”(Skidmore and Smith, 42)

Keeping this in mind, one applies this background knowledge to the region of Latin America. Historically, the markets and economies of Latin America have functioned with near absolute dependence on the needs and conditions of foreign markets. Largely, this economic relationship is referred to as dependency theory.

This dependence was instilled from the incipient colonization efforts of Spain and Portugal, which operated on the monarchial duty of mercantilism; all efforts were done in honor of the mother country alone. With the fall of colonialism and the onset of independent government, two major transitions occurred.

First, the newly independent governments advanced peoples of European blood and descent into the majority of political positions and a new upper class was established, “Given these new economic incentives, landowners and property owners were no longer content to run subsistence operations on their haciendas; instead they sought opportunities and maximized profits” (S+S, 45); this would later affect economics, politics and society as a whole. Second, entry into a development period attempting a new model of growth, focused primarily upon the creation and balance of imports and exports.

The outcomes of this period varied for different countries of Latin America, mainly dependent upon the resources found inside their borders and the desire of the outside world to invest within. Investment served as both the promise and poison of this period. With the Industrial Revolution altering production priorities around the world, less developed areas were sought to act as a production center of natural and raw materials, “Between 1870 and 1913 the value of Britain’s investments in Latin America went from 85 million pounds sterling to 757 million pounds in 1913 – an increase of almost ninefold in four decades.” (S+S, 43)

The importance of this transition is found in the fact that investment in Latin America was made only to develop industry, which produced raw materials necessary to fuel the industrial revolution in Europe and the United States. The next phase of economic development was spurred primarily by the Great Depression, and two World Wars. What both of these events demonstrated was that if Latin America continued economic dependence to such an extreme upon foreign markets then internal unrest would be felt by every external, international unrest.

For young markets and weak governments, such an outlook could not be considered. Thus, a major economic trend developed under the encompassing title of “ primary product import substitution,” which in response to these realizations encouraged the creation and promotion of national industry. To redirect market sectors toward the production of finished products, not merely raw materials, as previously produced, “ By producing industrial as well as agricultural and mineral goods, the Latin American economies would become more integrated and self-sufficient. And, as a result, they would be less vulnerable to the kinds of shocks brought on by the worldwide depression.” (S+S, 53)

The final phase, following generalized periods of success and growth lead to the inevitable realization that the world market was becoming exponentially imbalanced. Impracticalities in the idea of Latin America becoming a world trading partner of finished goods soon showed themselves as unemployment began to rise from less demand on manual labor and wages failed to rise with prices on the world market of more highly industrialized countries. Beyond wages however was the more important loss of purchasing power from their goods, “Over time, the world market prices of Latin America’s principal exports underwent a steady decline in purchasing power.” (S+S, 56)

For the same amount of products used in the past, less capital goods were being purchased. This marked the point of entry for many countries into failing economies and debt. Governments, in desperation, were at a point of decision, and the new answer came in the form of, debt-lead growth and corporatism. Simultaneously, there was an international trend of opening markets to practices of free trade. As governments de-nationalized industry and took on increased loans from the IMF and World Bank, inflation ensued throughout the economy, “Between 1970 and 1980 Latin America increased its external debt from $27 billion to $231 billion, with annual debt-service payments (interest plus amortization) of $18 billion.” (S+S, 58)

In exchange for debt relief, the IMF imposed restrictions on Latin American economies, which were largely termed as “structural adjustments.” These practices were being followed at first, yet the initial periods of time proved to burden primarily the lower classes and by-pass the elites, whose prosperity was secured outside of the country’s direct economy. The long-term result of economic reform has been the lowering of inflation, “Excluding Brazil, average inflation throughout the region dropped from 130 percent in 1989 to 14 percent in 1994.” (S+S, 60)

Brazil did not heed the advice of the IMF and did not choose to undergo the stringent economic reforms of the 1970’s and 80’s. Although the generalized trend was a lowering of deflation in the 1990’s, Brazil fell short from that scenario and inflation soared. As reported by Skidmore and Smith, the rate of inflation found in 1993 was 2490 percent annually. In that same year a new finance minister was named, Fernando Cardoso, with his title came a $122 billion foreign debt. (My Brazil)

In 1994, a new anti-inflation program was developed and this began to show results. Entitled, the “Real Plan,” its stringent economic reforms lead to improvements, “…consumer prices increased by 2% in 1998 compared to more than 1,000% in 1994.”(CIA World Fact Book) After initial improvements, Brazil became a victim of the 1998 world economic crisis, which began in Asia, spread to Russia and from there hit Brazil. Due to these pressures placed on the Brazilian currency, interest rates were hiked 50%, and according to the CIA, investment fled the country, “Approximately $30 billion in capital left the country in August and September.”(CIA World Fact Book)

After receiving $41.5 billion in relief from the IMF, Brazil entered a new phase of economic reform to incorporate both a devaluation of the currency and a free floating exchange rate, “On 13 January 1999, Central Bank officials announced a one-time 8% devaluation of the real, and on 15 January 1999, the currency was declared to be freely floating.” The immediate results from this are unable to be realized at such an early stage, yet companies are leaving neighboring nations and heading for Brazil due to the Brazilian devaluation, as reported in a recent “Business Week” article, “ The 35% slide of the Brazilian real against the Argentine peso is luring one manufacturer after another north to Brazil.”(Business Week)The current government under Cardoso can only speculate the outcome for now.

Cuba has served as a classic example of the problems and downfalls of a dependent market system. The main commodity produced worldwide by Cuba is sugar, and being a primary product, the price fluctuates internationally. Beyond traditional factors that play into the economy of Cuba, one had remained fairly consistent over the last two decades until 1992, when the collapse of the Soviet Union ended any allied funding toward Cuba, “By 1992 all Russian Economic and military aid was gone. Oil shipments fell 86 percent from 1989 to 1992, while food imports dropped 42 percent in almost the same period.” (S+S, 291). And, as reported by the CIA, “Havana announced in 1995 that GDP declined by 35% during 1989-93, the result of lost Soviet aid and domestic inefficiencies.” (CIA World Fact Book)

This was the ultimate and shattering example of how too much dependence upon any one market is unsound. This of course was only in addition to the struggles endured from the US embargo already in place. Skidmore and Smith goes on to report that in 1990, Cuba had a $6 billion debt. At the end of the decade little improvement has been found, as in 1998 export earnings were reported to have declined by 22%. (CIA World Fact Book). Most analysts speculate that until Cuba is accepted into the capitalist West and expands from primary products, the cycle will only continue to fail.

Politics: An examination of politics should logically follow economics, as the two are intrinsically influential upon one another, as presented earlier. In considering economic ramifications throughout Latin America, the prospects of colonialism begin such a view. Latin America is an interesting case study due to the existence of indigenous cultures in place throughout the region who were exploited by European settlers and have attempted to culminate and blend as a single society in the current day. The three primary civilizations of note, Mayan, Aztec, and Incan, were each overcome by the conquistadors initially from both, Spain and Portugal.

Each region, being carved as a vice royalty to a distantly respective monarchy, bowed to the pressures and duties of mercantilism. The colonies were to serve the motherland and the motherland alone. The workings of the social stratifications of Latin America begin as the European colonizers and indigenous peoples develop a class society founded on the premise of dominance through European ancestry.

These class divisions were embodied in three separate categorical races: peninsulares, whites born in Spain; criollos, whites born in the new world; mestizos, the mixed Spanish and Indian blood race, and the few indigenous peoples that survived the plague of disease brought on by the Europeans. So began the complex social stratifications embodied within every facet of culture and politics. With the defeat of the Spanish Armada, symbolically the power of Spain was diminishing and thus, the ambitions of the colonies were increasing.

Charles III was the last in a succession of rulers, which attempted to consolidate control over the colonies. This was attempted by both re-designing the administrative system governing the colonies and allowing free trade to occur from any of the ports to Spain, as contained in, the “Declaration of Free Trade.” The unsatisfied colonies were finally forced to loose allegiance to the crown when Napoleon removed King Ferdinand and placed his brother upon the throne. Many see this as the fateful move, which lead to colonial independence, “Without Napoleon’s interevention the Spanish American colonies might all have remained Spanish until well into the nineteenth century, as did Cuba.”(S+S, 29)

Napoleon’s action may not have caused the rebellions alone, yet they served as an impetus for change. This change came all too often tin the form of revolts and rebellions, yet slowly, the provinces gained their independence and a new era of struggling to establish legitimacy and stability in the established world order began. The economic troubles of these early governments had begun before the leaders had even fully been initiated into office and this economic frailty would follow these governments for decades to come.

The militant warfare and fighting of the nineteenth century was due mainly to a combination of factors consisting of social stratifications and economic inadequacies. These inadequacies lead to a period of military rule throughout most of Latin America; some of this was phased in and out as others forms official dictatorships, with an iron grip upon the people, Within a year or so after the October 1929 stock market crash in New York, army officers had sought or taken power in Argentina, Brazil, Chile, Peru, Guatemala, El Salvador, and Honduras.” (S+S, 52). As economic troubles expanded, the role of the military in government decreased, “In this context of economic crisis, Latin America turned way from authoritarianism – and, in many cases, toward democracy.” (S+S, 60)

Generally the expanded middle class began demanding for greater accountability within the government. This trend increased throughout the twentieth century and today Latin America boasts an all time high in democratically elected governments, with the continued exclusion of Cuba, and this period of democracy may set the precedence for forms of government and success in fulfilling the desires of a people.

The governmental situation within Argentina has been marked with considerable amounts of upheaval and violence, even when gauged by Latin American norms. Within the decade of the nineties much focus has been given to events in Argentina’s past, primarily concerns, which focus upon the Dirty War.

As President of the country, Menem had begun a series of attempts to punish human rights offenses, which had occurred prior to his tenure. This action prompted mass riots and several rebellions, which posed serious threats and questions toward the legitimacy of government. Menem ceded pardons and the issue gradually subsided, yet this serves to show how actions and inactions of past regimes affect the governments of today. The continued power of military influence upon government remains evident in Argentina today.

In 1994, as held by Skidmore and Smith, the constitution was reformed for proclaimed reasons of efficiency and transparency, although some viewed it as a maneuver by which to prolong the rule of Menem. Menem was indeed successful in prolonging his term by winning the elections of May 1995. Under Menem, much of the Argentinian foreign policy mirrored that of the US, “… Menem adopted a foreign policy in line with the United States (the foreign minister, indeed, was reported to have quipped that Buenos Aires was seeking “carnal relations with Washington).” (S+S, 113) In October of 1999 elections were held once again, this time favoring candidate, Fernando de la Rúa Bruno by receiving 48.5% of the popular vote over contender Maldonado. (Elections in Argentina)

Chile mirrors the haunting past of Argentina, as former criminal acts are now on the forefront of the modern political agenda. Only since the nineties has Chile consistently begun to follow democratic procedure. This procedure has of course, included investigations of past human rights abuses. The source of the conflict has most often come down to a single man, Pinochet. The role of the military in the Chilean government is still heavily felt in many sectors of government, most notably the judiciary; thus the struggle continues to design democracy amidst military tradition, precedence, and pressure. These pressures overall are beast summed up by Skidmore and Smith,

“Chile’s newly restored democracy also faced formidable obstacle: an ever-alert army still headed by an unrepentant Pinochet, a pro-military judiciary, a rightist-dominated Senate, sporadic terrorism from left and right, and the explosive issue of what to do about past human rights abuses – with its potential to ignite civilian-military conflict.”(S+S,145)

The presidential election of 1993 brought victory to Eduardo Frei, the son of a former Chilean President. The economic security and growth felt throughout the Chilean economy during the nineties was a stabilizing effect upon government as well. The elections held in December and Jamuary of this year introduced candidate Escobar to the presidency (Elections in Chile). Escobar ran on a platform to decrease governmental intervention in economics and increase focus and spending on public works. This marks a notable transition from past military rigidness faced by businesses and industry.

Poverty: Stemming from the “dependencia theory,” the source of poverty throughout Latin America might possibly be postulated in any number of manners. The fact remains that at some point a world based totally on agrarian and manual labor, was altered by the industrial revolution. Latin America was certainly chosen to be the warehouse of supplies and materials, not the boutique boasting finished products. Once an economic cycle begins, it becomes difficult to alter; many years later, international powers have faithfully held the same positions, including Latin America. The fate of third world is largely determined by a lack of economic opportunity, which many might contend is ultimately inaccessible due to a lack of education.

With a population of 85 million people, Mexico boasts one of the largest citizenries, yet also one of the lower standards of living.(S+S, 4) Together, high numbers of people, with low standards of living, has made Mexico a country plagued with poverty, and with that, higher rates of crime. The mid nineties brought further economic crisis to Mexico as NAFTA had unpredictable effects on the Mexican economy, “Fearful of the overvaluation of the peso, investors withdrew more than $10 billion from Mexico within a week.” (S+S, 261)

This of course led the US to create an emergency aid package, necessary to prevent default on Mexican debts. The ultimate concern has and continues to be the direct connection between market conditions and the welfare of people at large, which only shows grim results for now, “Between 1963 and 1981, according to one study, the proportion of Mexicans below the poverty line dropped from 77.5 to 48.5 percent; but from 1982 to 1992, under the pro-market reforms, it rose again to 66 percent. (S+S, 262)

Considered to be the poorest country in the Western hemisphere, Haiti serves as the ultimate of lowered living standards, “ With a population of about 6.7 million, Haiti has a per capita income of approximately $370. (S+S, 301) Originally colonized by the French, Haitian slave labor from Africa eventually took over government. Following a political history of violence and rebellion, Haiti still remains on the outer edges of political stability. Aid amounts given to Haiti are high, yet the actual dispersion of these funds is halted often if the government shows signs of internal fracturing or corruption. Here is a list of aid currently being given to Haiti:

  • Inter-American Dev. Bank$761 million
  • World Bank (International Dev. Association)$377 million
  • International Monetary Fund$131 million

Education: Education is able to be shown in direct correlation to one’s standard of living and thus, this becomes a central issue on both the political and social agendas of Latin America. The low budgets of Latin American governments often leave public works, including education, on the bottom rung of priorities.

Money is needed to attempt to solve problems caused ultimately by a lack of education, instead of being spent on education itself, thus this creates a problem of a self perpetuating nature. Only in the twentieth century has this cycle of poverty and dependence been actively pursued by increasing the quality and standards of education, and political activism has been a central mode through which such changes might be made.

Peru is highlighted under education to understand the multi-facted uses of education in Latin America. Far from traditional educational institutions, agrarian education as well as environmental education has a far more valuable impact in these countries. “Perumujer” is an NGO, which spreads literacy throughout farming regions, yet more importantly, adds components of conservancy and ecological education which not only allow the Peruvians to farm more efficiently, yet bring higher yields of food using smaller land area.

Many of the storms throughout Latin America cause mudslides, which kill thousands each year; most often this is due to barren hillsides, which have been inappropriately farmed. Education in many countries focuses on applicable and pertinent living skills and this can make an impact with unlimited benefits.

This island country is one general exception to the trends of education in Latin America and thus is used as an example of possible success in the educational sector. Over the last ten years, Costa Rica has boasted a 93% literacy rating, far above the averages held by many tropical neighbors.(Info Costa This exists as the most literate population in Central America.

In 1869 the Costa Rican government, having generated large sums of wealth from the coffee industry made education mandatory and free. Then having one the lower literacy rates, one in ten could read and write; Costa Rica sets an uplifting trend that has developed over time. Not having a university until 1940, Costa Rica now proudly has four such places of study and continues to devote more money toward education annually. Students, under President Figueres, are now required to take English, tying Costa Rica more closely into the new economy and increasing success for tourism. (Info Costa

In an analysis of the structures in place in the areas of economics, politics, poverty reduction, and education, one sees that the state of development in Latin America is not neglected for sure-sighted tactics are consistently being employed. The point of interest is that within all of these categories, most political stability has not fully developed until the onset of the final decade of the twentieth century.

Development in Latin America is a priority and examples of successes are amply available, even in the midst of setbacks. In summation, the development of Latin America is progressively transitional. With time, continued effort, and constant pursuit of democratic principles, the development of Latin America will succeed.

Works Cited

  1. Elections in Argentina by Wilfried Dirksen, 2000
  2. My Brazil by Sergio Koreisha, 1997
  3. CIA World Fact Book: Brazil, 2000
  4. CIA World Fact Book: Cuba, 2000
  5. Info Costa Overview, Education

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