Ball, Molly C.
Book
La in Ame ican Economic His o y: An In oduc ion o Daily
Li e, Deb , and De elopmen
La in Ame ican Tópicos
P o ided in Coope a ion wi h:
Taylo & F ancis G oup
Sugges ed Ci a ion: Ball, Molly C. (2025) : La in Ame ican Economic His o y: An In oduc ion o Daily
Li e, Deb , and De elopmen , La in Ame ican Tópicos, ISBN 978-1-040-14927-0, Rou ledge, Ox o d,
h ps://doi.o g/10.4324/9781003283843
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La in Ame ican Economic His o y: An In oduc ion o Daily Li e,
Deb , and De elopmen guides eade s h ough signi ican ea u es and
de elopmen s in he egion’s economic his o y om independence h ough
2022.
In app oachable language, he book in oduces eade s o ele an
New Economic His o y concep s and explains impo an cha ac e is ics
o La in Ame ica, such as he egion’s high ola ili y, apid u baniza ion
expe ience, he con inued p ominence o commodi ies, and i s cul u e o
in o mali y. The olume p o ides explici connec ions be ween cul u e,
poli ics, and economics o e i e dis inc ime pe iods. Reade s will lea n
how Cinco de Mayo ea u ed in o eign deb epaymen s in he nine een h
cen u y, how no els like Gab iel Ga cía Má quez’s One Hund ed Yea s o
Soli ude e lec ed on he expansion o ail oads du ing a pe iod o expo -
led g ow h, and how a Uni ed S a es ede al ese e in e es hike in 1979
sen he egion in o he Los Decade. When conside ed collec i ely, he
egion’s economic ajec o y demons a es ha de elopmen does no
always accompany economic g ow h.
This is an accessible in oduc o y ex wi h clea de ini ions and
discussions o ele an economic concep s, which will be a aluable
esou ce o s uden s o La in Ame ican economic, cul u al, and poli ical
his o y.
Molly C. Ball eaches his o y and coo dina es La in Ame ican S udies a
he Uni e si y o Roches e . He monog aph, Na iga ing Li e and Wo k in
Old Republic São Paulo (2020), and schola ship examine he in e sec ions
o economic and social his o y by explo ing how la ge mac o e en s
impac ed people’s daily li es and expe iences.
La in Ame ican Economic His o y
La in Ame ican Tópicos
La in Ame ican Tópicos
Edi ed by Michael LaRosa, Rhodes College
Teleno elas in Pan-La ino Con ex
June Ca olyn E lick
The Younges Ci izens
Amy Risley
La in Ame ican Soldie s
A med Fo ces in he Region’s His o y
John R. Bawden
Na u al Disas e s in La in Ame ica and he Ca ibbean
Coping wi h Calami y
June Ca olyn E lick
Public Heal h and Beyond in La in Ame ica and he Ca ibbean
Re lec ions om he Field
She i L. Po celain
Essays on 20 h Cen u y La in Ame ican A
F ancine Bi b aghe -Rozencwaig
La in Ame ican Economic His o y
An In oduc ion o Daily Li e, Deb , and De elopmen
Molly C. Ball
Fo mo e in o ma ion abou his se ies, please isi :
www . ou ledge .com /La in -Ame ican -Tpicos /book -se ies /LAT
La in Ame ican
Economic His o y
An In oduc ion o Daily Li e, Deb , and
De elopmen
Molly C. Ball
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© 2025 Molly C. Ball
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ISBN: 978-1-032-25546-0 (hbk)
ISBN: 978-1-032-22434-3 (pbk)
ISBN: 978-1-003-28384-3 (ebk)
DOI: 10.4324/9781003283843
Typese in Sabon
by Dean a Global Publishing Se ices, Chennai, India
To D . S e en Ma ks, my o e e model o wha a p o esso
and men o should be, and o Pablo, whose unwa e ing
suppo and ai h make p ojec s like his possible.
Con en s
Acknowledgmen s iii
1 G ow h s. De elopmen 1
2 New Na ions (Independence–1870) 21
3 Expo -led G ow h (1870–1930): Pa I 38
4 Expo -led G ow h (1870–1930): Pa II 52
5 S a e-led G ow h (1930–1980) 69
6 The Ma ke Re u n (1980–2008) 98
7 Recen His o y (2008–2022) 119
Conclusion 135
Index 141
4 G ow h s. De elopmen
The egion’s sou he nmos coun ies, known as he Sou he n Cone
(A gen ina, U uguay, Chile, and pa s o B azil), cons i u e he ou h and
inal subg oup o he pe iod om independence h ough 1930. Du ing
he colonial pe iod, hese a eas we e la gely pe iphe al zones. Mo e di -
icul o each by anspo a ion, labo was also sca ce . Exploi a ion and
Indigenous and cha el sla e y did exis in hese spaces, bu pe iphe al con-
di ions p o ided mo e oppo uni ies o social mobili y. Tempe a e-zone
ag icul u e also lou ished he e, incen i izing he sub egion o adop mo e
equi able land dis ibu ion. By he middle o he nine een h cen u y, a size-
able numbe o new Eu opean colonis s and immig an s a i ed, becoming
he dominan nine een h-cen u y labo o ce.
As Table 1.1 demons a es, some o e lap exis s be ween he g oups.
In Venezuela and Colombia, o example, A ican-descended popula ions
and opical ag icul u e domina ed coas al a eas, while highland a eas
concen a ed Indigenous-descended g oups and a mining sec o . Chile, on
he o he hand, had a s ong mining sec o and deep Indigenous oo s, bu
i also sha ed a simila ajec o y o o he Sou he n Cone na ions in he
la e hal o he nine een h cen u y. B azil’s sou he n and po ions o i s
sou heas egions a e also mo e closely ela ed o he Sou he n Cone expe-
ience in he la e nine een h and ea ly wen ie h cen u ies. The e o e, pa s
o B azil also i wi hin wo g oups.
As global ade expanded and p oduc ion ose and di e si ied, he size o
a coun y’s economy ook on added signi icance. F om 1930 o wa d, con-
side ing coun ies in e ms o small, medium, and la ge economies is help-
ul in making economic ajec o y gene aliza ions. This classi ica ion holds
ue o economic indica o s ela ed o indus ial g ow h, di e si ica ion,
and g oss domes ic p oduc pe capi a, he amoun o goods and se ices
Table 1.1 La in Ame ican subg oups: Independence–1930
Dominan nine een h-cen u y labo and
expo p oduc s uc u e
Coun ies
Indigenous and mes izo labo o ce and
mining expo s
Mexico, Colombia, Boli ia, Pe u,
Chile, Venezuela
Indigenous and mes izo labo and
subsis ence ag icul u e o ag icul u al
expo s
Pa aguay, Ecuado , Nica agua, El
Sal ado , Hondu as, Gua emala
A o-descended labo and opical
ag icul u al expo s
B azil, Venezuela, Panama,
Colombia, Dominican Republic,
Hai i, Cuba,* Pue o Rico,*
Cos a Rica**
Eu opean-descended labo and empe a e
ag icul u e
A gen ina, U uguay, Chile, B azil
No es: * Fo mos o he 19 h cen u y, Cuba and Pue o Rico emained Spanish colonies.
**Cos a Rica p edominan ly elied on Eu opean-descended labo .
G ow h s. De elopmen 5
p oduced by a coun y di ided by i s popula ion. O he quali y-o -li e indi-
ca o s, like in an mo ali y and li e acy, seem o ollow he i s ypol-
ogy ela ed o colonial labo s uc u es and na u al endowmen s. Mos
coun ies in he egion a e classi ied as small economies. Pe u, Colombia,
and Venezuela a e medium-sized economies, while B azil, he nin h la g-
es global economy, and Mexico cons i u e la ge economies. The one
excep ion is he Sou he n Cone egion, whe e Chile (medium), A gen ina
(medium), and U uguay (small) con inue o sha e simila ea u es.
Economic G ow h s. Economic De elopmen
Economic his o y is o en conce ned wi h g ow h and de elopmen , wo
e ms ha a e in ima ely in e wined, bu no synonymous. G ow h occu s
when he amoun o goods o se ices ha a coun y p oduces inc eases.
The meaning o de elopmen has changed o e ime. As a cons uc ed
e m, changing socie al alues and goals mean ha wha de elopmen
mean in he nine een h cen u y is no necessa ily consis en wi h ou cu -
en unde s anding o de elopmen . This book will use he Uni ed Na ions’
human de elopmen index (HDI) as he en y poin o discussing de elop-
men . Since he 1990s, schola s ha e used he me ic as he leading indi-
ca o o de elopmen . HDI a e ages li e expec ancy, yea s o schooling,
and income pe capi a o each coun y, allowing o compa isons ac oss
na ions and egions.7 The augmen ed human de elopmen index goes one
s ep u he o acknowledge ha he HDI index canno ully ep esen
choices and pe sis en inequi ies, no ing momen s o es ic ed poli ical
eedoms and pe sis en inequi ies.8
Economic g ow h is usually equi ed o economic de elopmen , bu
economic g ow h can occu wi hou o wi h minimal de elopmen . Since
independence, La in Ame ica has enjoyed economic g ow h; howe e ,
gains o de elopmen ha e o en been lacklus e . On he indi idual le el
his means ha he ypical inhabi an in La in Ame ica enjoyed a be e
quali y o li e han he gene a ion be o e hem, bu ha hose imp o emen s
should ha e been e en highe . Regional ailu es o edis ibu e weal h and
esou ces mean ha La in Ame ican coun ies a ed poo ly compa ed o
o he coun ies wi h simila incomes in e ms o indica o s like in an mo -
ali y a es, educa ional achie emen s, and labo o ce pa icipa ion.
Popula ion g ow h is one o he main d i e s o economic g ow h, bu
cul i a ing a new c op, opening a new ac o y, a new echnology, and
expanding he se ice indus y can also esul in GDP g ow h. When he
o al alue o p oduc ion g ows as e han he popula ion, a coun y’s
g oss domes ic p oduc pe capi a (GDP/capi a) inc eases. Theo e ically,
hese new e enues could dis ibu e hese gains ac oss he popula ion. Fo
example, i a me s success ully plan , g ow, and sell an addi ional c op,
his b ings in a new sou ce o income o he a me s. Wo ke s on he a m
6 G ow h s. De elopmen
Figu e 1.1 Map o mode n La in Ame ica by economy size, 1930–2022. The
economy size o Pue o Rico and Belize a e no included as he o me is
a e i o y o he Uni ed S a es and he la e is a o me B i ish colony.
G ow h s. De elopmen 7
also ha e he po en ial o gain, depending on whe he he a m owne s
aise wages o o e bonuses o se ices o he labo o ce. The go e nmen
can also make gains by ei he le ying a ax on expo s, a sales ax, o a ax
on he ag icul u alis s’ p o i s. The go e nmen can hen use he money
om hese axes o p o ide goods and se ices o he popula ion a la ge,
such as building o imp o ing schools, oads, o in as uc u e. The new
c op has made a bigge pie, bu i has also inc eased he size o he pie o
e e yone.
In La in Ame ica, he pie has con inued o ge bigge , bu some slices
ha e g own while o he s ha e sh unk. Be ween 1820 and 2008, he
egion’s economy g ew s eadily, albei a a slowe pace han economies
in Wes e n Eu ope, Aus alia, he Uni ed S a es, and Canada ( he Wes ).
La in Ame ica’s sha e o global GDP also inc eased conside ably, om jus
1.9 pe cen in 1820 o 7.8 pe cen in 2008. Popula ion g ow h explains
much o La in Ame ica’s GDP g ow h, bu GDP pe capi a also inc eased
en old.9 Figu e 1.2 shows how La in Ame ica a ed ela i e o he Wes
and he es o he wo ld. A independence he egion’s GDP pe capi a
was jus o e hal o ha o Wes e n coun ies. Since independence
La in Ame ican pe o mance ela i e o he Wes has s eadily declined.
0
0.5
1
1.5
2
2.5
3
1820 1870 1913 1929 1940 1950 1973 1980 1990 2000 2008
Lan Ame ica / es o he wo ld Lan Ame ica / Wes
Figu e 1.2 La in Ame ica g oss domes ic p oduc pe capi a ela i e o he Wes
and he wo ld, 1820–2008. G aph elabo a ed om Bé ola and
Ocampo, Economic De elopmen o La in Ame ica, able 1.1, pp. 4–5.
No es: The Wes is he equi alen o 12 Wes e n Eu opean coun ies, Aus alia, Canada,
Uni ed S a es, and New Zealand. La in Ame ica does no include Hai i.
8 G ow h s. De elopmen
I s pe o mance ela i e o he es o he wo ld has been mo e a ied.
Rela i e GDP pe capi a la gely imp o ed om independence o 1930 and
a e Wo ld Wa II h ough 1980. The in e wa yea s, howe e , ep e-
sen ed a ela i e decline as did he 1980s. Since ha pe iod he egion
has con inued o ou pe o m A ican economies, bu Eas Asian econo-
mies ha e ou paced La in Ame ican g ow h, and by 2008, many o La in
Ame ica’s gains om he ea lie pe iods had e oded.
Wha goods and se ices con ibu ed o he GDP g ow h in Figu e 1.2?
This is an impo an ques ion o answe because explo ing wha is p o-
duced a he han how much is an al e na i e way o conside g ow h
and, a guably, de elopmen . Di e si ying p oduc ion o include a wide
ange o goods and se ices helps educe economic ola ili y, a p oblem
ha plagues mode n La in Ame ican economic his o y. This is because i a
coun y elies oo hea ily on p oducing one o jus a ew ypes o goods, i s
economy is suscep ible o any ma ke changes associa ed wi h hose goods.
This high ola ili y impac s e e y hing om p ices o mig a ion, making i
di icul o go e nmen s o und na ional budge s and complica ing en e-
p eneu s’ and consume s’ planning o he u u e.
The e a e wo addi ional challenges La in Ame ica has aced ela i e
o expo good p ices. The i s is he e ms o ade ola ili y expe ienced
when he p ice coun ies ecei ed o expo s ela i e o he p ices hey
paid o impo s luc ua ed. Say a coun y expo s whea and impo s
sc ews. When whea p ices a e high ela i e o sc ews, hen he coun y
can impo mo e sc ews. Howe e , i whea p ices d op, e en i sc ew
p ices do no shi , he whea -p oducing coun y will ha e o educe he
numbe o sc ews impo ed. Since he la e nine een h cen u y, e ms o
ade p ice a ia ions in La in Ame ica ha e become mo e d ama ic and
shi ed mo e quickly, adding o he egion’s economic ola ili y.
A key eason o his ola ili y is ha ce ain p oduc s a e mo e sus-
cep ible o p ice luc ua ions han o he s. Goods all in o ca ego ies based
on hei unc ion and who uses hem. P ima y goods a e sold o con-
sump ion and a e g own o ound na u ally. F om whea and bananas o
mined ma e ials like coppe and in, hese a e also known as commodi-
ies.10 The e a e in e media e goods, he ma e ials o ing edien s needed o
make inished p oduc s. Some commodi ies, like me als and ag icul u al
p oduc s, can also be in e media e goods, while o he s, like nails, sc ews,
and clo h, a e p ocessed p ima y goods. Capi al goods a e he buildings,
machines, and ools needed o c ea e a p oduc . Finally, consume goods
a e hings ha people buy and use di ec ly, like clo hes, appliances, ood,
ele isions, and books. I we use a chocola e chip cookie analogy, in e -
media e goods, like suga and chocola e chips, a e he ing edien s (in his
case, suga is also a commodi y), he capi al goods a e he mixe and o en,
and he consume good is he inal cookie.
G ow h s. De elopmen 9
To p oduce any o hese goods equi es ou di e en elemen s: land,
labo , capi al, and en ep eneu ship. Ve y ew coun ies ha e he physical
size (land), na u al esou ces ( aw ma e ials), o manpowe (labo ) o spe-
cialize in e e y a ea. E e y coun y has limi ed esou ces (capi al) o allo-
ca e o p oduc ion. So, deciding whe he o p oduce T-shi s o o anges
can be a complex calcula ion ha en ails weighing economic possibili ies
alongside poli ical and social conside a ions. Much o colonial-e a La in
Ame ica was ich in he ac o endowmen s o land. Mining and opical
ag icul u al economies lou ished, albei o en on he backs o ensla ed
A ican and exploi ed Indigenous labo e s. In he nine een h cen u y, as
La in Ame ican na ions became independen , ag icul u al and aw ma e-
ial p oduc ion expanded in he egion. Wi h e ile soils and low popu-
la ion densi y, La in Ame ica was a land- ich egion, poised o p oduce
and expo commodi ies o an expanding global ma ke in exchange o
consume and capi al goods and se ices.
This expo ma ke , o he selling o p oduc s and se ices o o he
na ions, complemen ed he exis ing domes ic ma ke , he goods and se -
ices p oduced wi hin and o he na ional popula ion. Gi en hei na u al
esou ces, La in Ame ican economies ha e o en specialized in p oducing
and expo ing ag icul u al p oduc s and aw ma e ials. Un o una ely,
hese p oduc s a e o en he mos suscep ible o ma ke shocks. A d ough ,
a bumpe c op, a wa , o he en y o ano he p oduce and compe i o
has almos immedia e and la ge p ice e ec s. This ola ili y means some-
imes coun ies expe ience pe iods o ema kable GDP g ow h. Fo exam-
ple, inc eased demand o me als like in and coppe du ing Wo ld Wa
II (1938–1945) led o ex ao dina y g ow h in Boli ia and Chile. These
pe iods, howe e , a e o en ollowed by p ices bo oming ou o cu ency,
banking, and deb c ises. In La in Ame ica, such economic ins abili y o en
exace ba es s uc u al social inequi ies and has equen ly con ibu ed o
bu geoning poli ical c ises. B azilian ubbe a he u n o he wen ie h
cen u y p o ides a good case s udy. In 1910, B azil p oduced he majo -
i y o he wo ld’s ubbe , bu when B i ish plan a ions in Malaysia suc-
cess ully began p oducing ubbe om smuggled Ha ea B asiliensis seeds,
B azil’s global ma ke sha e d opped o jus 11 pe cen . Almos o e nigh ,
in as uc u e g ow h in B azil’s Amazon egion slowed conside ably.
Finding a new esou ce is also some imes associa ed wi h “Du ch dis-
ease.” Con a y o wha is expec ed by i s name, he e m can be applied
ac oss egions and ime pe iods. I e e s o a phenomenon whe e coun-
ies o colonies in es esou ces in he in as uc u e and p oduc ion in a
new sec o , o en a newly ound na u al esou ce. A he same poin , he
exchange a e app ecia es due o he in e es in he new sec o , disincen-
i izing in es men in o he sec o s, o en manu ac u ing o ag icul u e
wi hin he coun y. Wi h a highe exchange a e, impo ed p oduc s a e
10 G ow h s. De elopmen
cheape . When p ices o he new sec o o indus y d op, he allou is
conside able. G owing new na u al esou ce p oduc ion does no necessa -
ily esul in Du ch disease, bu Chile’s de elopmen o ni a es in he la e
nine een h and Venezuela’s oil sec o in he wen y- i s cen u ies o e jus
wo examples o he de elopmen challenges ha Du ch disease p esen ed
o La in Ame ica’s mode n economic his o y.
Gi en La in Ame ica’s compa a i e ad an age in he na u al esou ce
sec o , i is un ealis ic o imagine ha hese p oduc s will cease o ha e
impo an oles in na ional economies. Because o such high ola ili y
associa ed wi h hese na u al esou ces and ag icul u al p oduc s, how-
e e , he egion has implemen ed a ange o s a egies since independence.
Mos ecen ly, he egion has u ned somewha owa d iscal and mon-
e a y e o ms ha use ools like in e es and exchange a es o s abilize
he economy using a coun e cyclical app oach ha coun e s cu en eco-
nomic ends. Fo mos o he wen ie h cen u y, La in Ame ican na ions
sough o di e si y p oduc ion o achie e mo e s abili y and de elopmen .
Capi al and du able consume goods, like appliances o ca s, a e less sus-
cep ible o ma ke changes. I is because o hese ma ke eali ies ha
social scien is s and go e nmen leade s in he wen ie h and wen y- i s
cen u ies ha e o en pushed o c ea e and suppo La in Ame ican indus-
ial p oduc ion o capi al and du able goods. This objec i e was easie
o achie e o la ge coun ies o e he wen ie h cen u y, bu he sha e
o manu ac u ing in na ional economies has inc eased h oughou he
egion.11
Di e si ying p oduc ion also se es as a cushion when ma ke s weaken,
o expo p ices d op. The case o he came a demons a es his p inciple,
because while capi al and du able goods a e gene ally mo e s able, hey a e
no immune o ma ke luc ua ions. Be ween 1990 and 2010, he came a
wen om being he hallma k o amily aca ions o i ually obsole e.
Why did he dea h o he came a no ock na ional economies? Because
hose economies p oducing came as and ela ed in e media e and con-
sume p oduc s had hei eggs in mul iple baske s; hei economies we e
di e si ied. In La in Ame ica, despi e di e si ica ion p o ing somewha
success ul in domes ic ma ke s, he expo eggs ha e his o ically been spli
be ween one, wo, o possibly h ee baske s. In 1870, he leading expo
a e aged hal o each coun y’s o al expo sha e and he op h ee expo
p oduc s wo- hi ds. By 1930, hose sha es had only inc eased o 54 and
73 pe cen , espec i ely. In Gua emala, B azil, Cuba, and El Sal ado , he
leading expo ep esen ed o e 70 pe cen o all expo s. The nex ou
decades saw g ea e di e si ica ion, bu he op h ee expo s s ill ep e-
sen ed o e hal o o al expo s in 1973.12
While di e si ica ion and GDP pe capi a do p o ide insigh in o de el-
opmen , hey a e only a pa o he equa ion. When, o example, esou ces
G ow h s. De elopmen 11
become disp opo iona ely concen a ed in he hands o a ew, inequali y
g ows. Mos schola s belie e ha inequali y alone is no wo isome, bu i
becomes p oblema ic when i is consis en and inc easing. La in Ame ica’s
mode n e a i s he la e g ow h pa e n: g owing economies wi h con-
sis en ly high and inc easing inequali y. O e he cou se o he wen ie h
cen u y, op income ea ne s saw hei sha e o income inc ease by 6 pe -
cen age poin s, while he sha e o bo om income ea ne s dec eased by
almos 2 pe cen age poin s.13 Much o his inequali y g ew be ween 1870
and 1960, and hen emained high, bu concen a ed inc eases be ween
1900 and 1929 and Wo ld Wa II and 1960 widened he gap be ween ich
and poo .
The scale o consis en weal h consolida ion in La in Ame ica shows
ha economic g ow h has esul ed in unde de elopmen . One way ha
schola s measu e inequali y is by calcula ing he di e ence be ween pe ec
weal h and ac ual weal h dis ibu ion. Pe ec equali y, whe e e e yone
has he exac same amoun o weal h, is no ealis ic, bu he deg ee o
which a coun y de ia es om ha pe ec dis ibu ion gi es a numbe
be ween 0 and 1 called he Gini coe icien . The close o ze o means he
close o pe ec equali y, while he close o one means he mo e une-
qual he dis ibu ion. Beyond sub-Saha an A ica, La in Ame ica, as a
egion, has he highes Gini coe icien s in he wo ld, in e ms o bo h
land and income measu es. P ac ically speaking, his means ha he ich-
es 10 pe cen o each coun y’s popula ion con ols a ound 40 pe cen
o he na ional weal h, while he poo es 40 pe cen con ols less han 15
pe cen .14 These high inequali y igu es a e s iking, especially conside -
ing ha a he s a o he nine een h cen u y, La in Ame ican inequali y
measu es we e simila o hose o Wes e n Eu ope. Fu he mo e, since
Wo ld Wa II, and pa icula ly du ing he 1960s and 1970s, while o he
egions saw imp o ed weal h dis ibu ion, La in Ame ica con inued o see
inc easing inequali y.
B oade de elopmen indica o s also sugges he egion’s unde de el-
opmen and unequal access o gains and oppo uni ies. In 2019, La in
Ame ica’s HDI index was 0.766, a numbe simila o China’s. As a egion,
he index was lowe han ha o Eu ope and Cen al Asia, bu highe
han indices o Eas Asia and he Paci ic, he A ab S a es, Sou h Asia,
and sub-Saha an A ica. The e was, howe e , a ai deg ee o a ia ion
be ween coun ies wi hin he egion. In 2022, Sou he n Cone coun ies,
Cos a Rica, and Panama we e cha ac e ized as ha ing e y high human
de elopmen indices (abo e 0.898). La in Ame ica’s la ge economies o
B azil and Mexico, alongside Cuba, Pe u, Colombia, Ecuado , Dominican
Republic, Pa aguay, and Boli ia anked as highly de eloped (be ween 0.898
and 0.753). The Cen al Ame ican coun ies o El Sal ado , Gua emala,
Nica agua, and Hondu as anked as medium de eloped coun ies (be ween
12 G ow h s. De elopmen
0.753 and 0.631), and Hai i was classi ied as a na ion wi h low de elop-
men (below 0.513).15
A his o ical HDI o 1900 o 2010 es ima es La in Ame ica’s a e age
was jus 0.18 in 1900. By he middle o he wen ie h cen u y, ha numbe
would double, and by 2010 i eached an es ima ed 0.675. These inc eas-
ing numbe s a e p omising and sugges ha om independence h ough
he mode n e a, o he mos pa , he end in La in Ame ica has been
owa d educed po e y a es, inc easing li e expec ancy, and highe edu-
ca ional achie emen s.16 The 1940s and 1950s ep esen ed he g ea es el-
a i e egional gains in e ms o heal h and educa ion. Figu e 1.3 p esen s
a di e en s o y. When using he augmen ed human de elopmen index
(AHDI) ha also conside s ci il and poli ical libe ies alongside o he HDI
indica o s, he 1950–1980 pe iod demons a es a loss ela i e o o he
coun ies. The igu e also shows ha La in Ame ica emained below he
global AHDI a e age un il 1990, and ha he egion made minimal gains
ela i e o he es o he wo ld and o he Wes e n o shoo s (Canada,
he Uni ed S a es, and Aus alia). The egion’s pe o mance ela i e o
Eas Asia was pa icula ly lacklus e . La in Ame ica had a conside able
0
0.
5
1
1.
5
2
2.5
1870 1913 1929 1938 1950 1975 1980 1990 2000 2010 2020
La in Ame ica / Wo ldLa in Ame ica / Wes e n O shoo s
La in Ame ica / Eas Asia
Figu e 1.3 La in Ame ica augmen ed human de elopmen index (AHDI) ela i e o
he wo ld and o he egions, 1870–2020. G aph elabo a ed om da a
in Leand o P ados de la Escosu a, “Augmen ed Human De elopmen
in he Age o Globalisa ion.”
No es: La in Ame ica does no include he B i ish and Du ch Ca ibbean. AHDI indica o s
only become a ailable a e 1913 o he ollowing coun ies: Cos a Rica, El Sal ado ,
Gua emala, Hondu as, and Nica agua. Indica o s a e only a ailable a e 1950 o he
ollowing coun ies: Dominican Republic, Hai i, Panama, and Pa aguay. Wes e n o shoo s
include he Uni ed S a es, Canada, and Aus alia. Eas Asia includes China, Hong Kong,
Japan, Macau, Mongolia, No h Ko ea, Sou h Ko ea, and Taiwan.
G ow h s. De elopmen 13
ad an age o he la e in 1870, bu ha ad an age e oded o e he nex
cen u y and Eas Asia’s AHDI su passed La in Ame ica’s a he u n o he
wen y- i s cen u y.
Fu he complica ing a discussion o La in Ame ica’s de elopmen is
he ac ha wel a e gains ha e ha dly been equal ac oss popula ions.
Educa ion p o ides a good example. While spending on educa ion, p i-
ma y school en ollmen s, and li e acy a es imp o ed conside ably in he
wen ie h cen u y, concen a ed spending in uni e si ies a he han p i-
ma y schools and ela i ely minimal headway o imp o e a e age yea s
o schooling pu La in Ame ican coun ies well behind o he coun ies
wi h simila -sized economies.17 In ac , “In ou een epublics, mo e han
40 pe cen o he labo o ce had ewe han h ee yea s o schooling by
1970.”18
An addi ional wo d o cau ion is necessa y in e ms o in e p e ing his
his o ical HDI. Consis en , eliable da a o HDI indica o s and much eco-
nomic da a in many La in Ame ican coun ies only exis a e he mid-
wen ie h cen u y (see he Economic Commission on La in Ame ica – ECLA
– in Chap e 5). I can be pa icula ly di icul o ind e en popula ion da a
o smalle coun ies. Thus, schola s in e es ed in his o ical de elopmen
mus be willing o look o complemen a y, local s a is ics on mo ali y
a es, li e acy, elemen a y en ollmen s, and a endance eco ds o a mo e
nuanced unde s anding o speci ic de elopmen limi s and achie emen s
accompanying mode n La in Ame ica’s economic g ow h. When possible,
seeing how indi idual cha ac e is ics like gende , ace, class, and e hnici y
impac hese me ics will p o ide a mo e obus iew o his o ical de el-
opmen . They can e eal whe he ce ain g oups had p i ileged access o
de elopmen ad ancemen s while o he s we e la gely excluded. The e is
much oom o expand esea ch in hese a eas in u u e yea s.
Gi en hese challenges, his book will conside La in Ame ican de el-
opmen om se e al angles, pa icula ly o he pe iod p io o 1950.
Inc eased p oduc ion and di e si ica ion will be impo an indica o s,
bu so oo will discussions o he g ow h o elemen a y educa ion. Heal h
eco ds and s anda ds will complemen GDP igu es, speaking o qual-
i y o li e. In an mo ali y and li e expec ancy eco ds p o ide some
insigh , bu so oo can e idence on changes in a e age heigh s o e ime.
An h opome ic da a ha e a complica ed legacy, as heigh , weigh , and
skull size e idence we e his o ically collec ed o suppo aul y eugenicis
logic. While some pseudo-scien is s used he e idence o espouse an ideol-
ogy o supe io and in e io aces, changes in heigh s o en e eal people’s
access o a balanced, nu i ional die , pa icula ly du ing childhood. Thus,
when a g oup o people, on a e age, go sho e , an e ec called s un ing,
he decline was mos o en a esul o ha dship o some kind, b inging
insigh o he dis ibu ion o oppo uni ies wi hin coun ies. Combining
20 G ow h s. De elopmen
Camou, Ma ia Magdalena, Sil ana Maub igades, and Rosema y Tho p. Gende
Inequali ies and De elopmen in La in Ame ica du ing he Twen ie h Cen u y.
London: Rou ledge, 2016. h ps://doi .o g /10 .4324 /9781315584041.
Cá denas, En ique, Jose Ocampo, and Rosema y Tho p, eds. An Economic His o y
o Twen ie h-Cen u y La in Ame ica: Volume 3: Indus ializa ion and he S a e
in La in Ame ica: The Pos wa Yea s. London: Palg a e Macmillan, 2000.
Co es Conde, Robe o, S anley J. S ein, Ji ina Rybacek-Mlynko a, and Jiřina
Rybáček-Mlýnko á. La in Ame ica: A Guide o Economic His o y, 1830–1930.
Be keley: Uni e si y o Cali o nia P ess, 1977.
Enge man, S anley L., and Kenne h L. Sokolo . “Fac o Endowmen s, Ins i u ions,
and Di e en ial Pa hs o G ow h among New Wo ld Economics.” In How
La in Ame ica Fell Behind, edi ed by S ephen H. Habe , 260–304. S an o d:
S an o d Uni e si y P ess, 1997.
F ankema, Ewou . Has La in Ame ica Always Been Unequal? A Compa a i e
S udy o Asse and Income Inequali y in he Long Twen ie h Cen u y. Leiden:
B ill, 2009.
G een ield, Ge ald Michael, and Sheldon L. Ma am. La in Ame ican Labo
O ganiza ions. New Yo k: G eenwood P ess, 1987.
Habe , S ephen H. How La in Ame ica Fell Behind: Essays on he Economic
His o ies o B azil and Mexico, 1800–1914. S an o d: S an o d Uni e si y
P ess, 1997.
Mi chell, B ian R. In e na ional His o ical S a is ics: he Ame icas, 1750–1993.
London: Macmillan, 1998.
Palma, José Gab iel. “De-indus ialisa ion, ‘P ema u e’ De-indus ialisa ion
and he Du ch Disease.” Re is a NECAT-Re is a do Núcleo de Es udos de
Economia Ca a inense 3, no. 5 (2014): 7–23.
P ados de la Escosu a, Leand o. “Augmen ed Human De elopmen in he Age o
Globaliza ion.” The Economic His o y Re iew 74, no. 4 (2021): 946–75.
———. “Inequali y and Po e y in La in Ame ica: A Long-Run Explo a ion.”
In The New Compa a i e Economic His o y: Essays in Hono o Je ey G.
Williamson, edi ed by Timo hy J. Ha on, Ke in H. O’Rou ke, and Alan M.
Taylo , chap. 12. Camb idge: MIT P ess.
Tho p, Rosema y. P og ess, Po e y and Exclusion: An Economic His o y o La in
Ame ica in he Twen ie h Cen u y. Bal imo e: Johns Hopkins P ess, 1998.
Topik, S e en, Ca los Ma ichal, and Zephy L. F ank. F om Sil e o Cocaine:
La in Ame ican Commodi y Chains and he Building o he Wo ld Economy,
1500–2000. Du ham: Duke Uni e si y P ess, 2006.
Uni ed Na ions. Economic Commission o La in Ame ica and he Ca ibbean.
Anua io es adís ico de Amé ica La ina y el Ca ibe. San iago: ECLAC, 1990.
Williamson, Je ey G. “Fi e Cen u ies o La in Ame ican Income Inequali y.”
Re is a de His o ia Económica 28, no. 2 (2010): 227–52. h ps://doi .o g /10
.1017 /S0212610910000078.
2
The i s e a o mode n La in Ame ican economic his o y came in he wake
o independence mo emen s and s uggles. Du ing he mid-eigh een h cen-
u y, a se ies o e o ms known as he Bou bon and Pombaline Re o ms
b ough d ama ic economic, geog aphic, and social e o ms o La in
Ame ica’s Spanish and Po uguese colonies, espec i ely. The me opo-
lises, emb oiled in con inen al wa s ha equi ed hea y spending, looked
o La in Ame ica as a pa ial solu ion. Sil e , gold, and diamond depos-
i s and nu ien - ich soil whe e suga p oduc ion h i ed we e adi ional
goods expo ed o he me opolis, bu he e o ms saw expanded in e nal
and o eign ade and a di e si ica ion o p oduc ion in o o he ag icul u al
sec o s. The e o ms also inc eased axes o hose li ing in La in Ame ica.
The egion, howe e , saw li le o his inc eased ax bu den ein es ed in
he as con inen . E en he oads mean o anspo hese goods so alu-
able o Spain and Po ugal emained woe ully main ained. The Bou bon
and Pombaline Re o ms also ei ied and e en s eng hened eli e hie a -
chies, pu ing indi iduals bo n in Eu ope a he op. Any en husiasm o
he e o ms was inc easingly challenged by c eole, Ame ican-bo n, eli es.
The e o ms also exace ba ed ensions among he gene al popula ion. In
he Andean egion, pa ly Indigenous leade José Gab iel Condo canqui,
also known as Túpac Ama u, his A o-Indigenous wi e Micaela Bas ides,
Tomás Ka a i, and Julián Apaza led a mul i-class and mul i- acial e ol
agains inc easing axes, bad go e nmen , and he colonial s a us quo in
1780. Al hough swi ly de ea ed, he ac ha o e 11,000 joined hei
cause wi hin days demons a ed mass discon en . Known as he G ea
Rebellion, i was a om he only e ol ; h oughou La in Ame ica, gen-
e al discon en saw an inc ease in ebellions and e ol s in he wake o he
Bou bon and Pombaline Re o ms. Up un il 1781, he G ea Rebellion was
he mos p ominen display o discon en .
The nex majo ebellion came om nei he a Spanish no Po uguese
colony, bu a he om he F ench colony o S . Domingue, p esen -day
Hai i. Be ween 1783 and 1791, S . Domingue ecei ed one- hi d o he
2
New Na ions
(Independence–1870)
This chap e has been made a ailable unde a CC-BY-NC-ND 4.0 licence.
DOI: 10.4324/9781003283843-2
10.4324/9781003283843-2
22 New Na ions (Independence–1870)
A lan ic sla e ade, and by 1789, mos inhabi an s we e A ican-bo n.
This popula ion included an inc easing ma oon popula ion made up o
ensla ed indi iduals who had dese ed hei plan a ions and se led in he
su ounding hin e lands. In Augus 1791, ollowing a eligious ce emony
in Bois Caiman, a mass sla e ebellion began. Thei ebellion ans o med
in o he Hai ian Re olu ion, as Hai i p oclaimed i s independence in 1804.
Ye , ecogni ion o ha independence wi h he 1825 Ag eemen p o ed
inc edibly cos ly o he new coun y.
Less han 30 yea s a e Hai ian independence, all o mainland La in
Ame ica was independen om Eu ope.1 The yea s ha ollowed ep e-
sen ed a pi o al pe iod in he egion’s mode n economic his o y, one in
which ecoloniza ion h ea s, c ippling deb paymen s, and hea y egional
in igh ing le ew unds o social se ices and challenged he egion’s abil-
i y o de elop o i s ull po en ial. When any s abili y was es ablished,
expo economies we e p io i ized, wi h ailways like he Güines Rail oad
in Cuba aking cen e s age. In e nal poli ical ins abili y also c ippled he
egion as libe als pushed conse a i es owa d measu es ha would make
land a adable asse , heo e ically expand public educa ion, and weaken
he Ca holic Chu ch’s connec ion o he S a e. Libe al e o ms became he
egional s anda d by 1860, bu hey we e no always popula , as demon-
s a ed by he F ench In e en ion and Mexico’s Cinco de Mayo, a ba le in
which Mexicans de ea ed he F ench o ces. S a es s uggled o adequa ely
und educa ion and o he public wo ks p ojec s and many Ca holics in he
egion saw he e o ms as un ai ly a ge ing he Ca holic Chu ch. Thus,
as ci il and egional con lic con inued, La in Ame ica’s de elopmen su -
e ed. The egion’s esou ces made i a guably be e o han he Uni ed
S a es and Canada a he end o he colonial pe iod, bu by 1870, La in
Ame ica had allen behind.
1825 Ag eemen (Po -au-P ince, Hai i)
In 1825, amids a blockade and unde he h ea o F ench in asion
and e-ensla emen , Hai i ag eed o epay 150 million ancs o F ance.
The e ms o he 1825 Ag eemen we e s eep o he new na ion and
le li le oom o de elopmen spending. In many ways, Hai i is s ill
epaying his deb . This e en demons a es he impac o so e eign deb
o Ame ican na ions in hei in ancy: na ional deb could be c ippling.
As nascen na ions, La in Ame ican coun ies had o ind e enues and
decide whe e hey we e going o spend money. Wi h hea y mili a y and
deb paymen s, he e was li le le o in as uc u e and public wo ks
in es men s. Fu he mo e, he 1825 Ag eemen , in pa icula , demon-
s a es he long- e m impac ha his o ic e en s can make on a coun y’s
de elopmen .
New Na ions (Independence–1870) 23
As La in Ame ica ansi ioned om independence mo emen s o na ion
building, leade s looked no only o secu e, bu also o inance, hei new
na ions. As colonies, he egion’s expo economies cen e ed a ound p e-
cious me als and suga , and local economies de eloped o complemen
hese en e p ises. Independence wa s, howe e , w eaked ha oc in many
places and mos o he new na ions – wi h he excep ion o B azil, an
empi e, and Cuba and Pue o Rico, s ill colonies – had jus spen yea s
igh ing hei la ges ading pa ne . Fu he mo e, a emp s om colonial
powe s o ecolonize con inued, meaning he majo i y o na ional budge s
we e jus i iably alloca ed owa d mili a y expendi u es. Expenses ou paced
e enues and hese coun ies ope a ed a conside able de ici s, spending
mo e han hey ecei ed. Nowhe e was his p edicamen mo e acu e han
in Hai i, he egion’s i s independen na ion.
As F ench Sain Domingue, Hai i was he wo ld’s iches colony,
known as he “Jewel o he An illes.” I p oduced co ee, um, co on,
and indigo, bu suga was i s mos luc a i e c op. By 1789, 75 pe cen
o he wo ld’s suga came om Sain Domingue, bu he backb eaking
labo was p edominan ly pe o med by ensla ed indi iduals. By 1791, 90
pe cen o Sain Domingue’s popula ion was Black o A o-descended, 80
pe cen was ensla ed, and hal had been bo n on he A ican con inen . In
ha yea , a massi e, coo dina ed sla e ebellion sen S . Domingue in o
a 13-yea igh o independence. Tha p olonged igh included F ance’s
abolishmen o sla e y in an e o o e ain he colony; he p oposed e-
ensla emen o he popula ion by Napoleon; and massac es o he su i -
ing F ench popula ion o de ed by he Black gene al Dessalines. The chaos
le he en i e egion e i ied o a simila up ising. The ea was so g ea
ha Hai i was le isola ed diploma ically and economically.
Independence was claimed in 1804, bu compe ing s a es and ideolo-
gies go e ned he no h and sou h and he sides only uni ed in 1818.
Uni y did no b ing ecogni ion, as F ance and mos o he Eu opean
na ions e used o ecognize Hai i’s so e eign y.2 (The Uni ed S a es’
ecogni ion o Hai ian independence only came a e he Emancipa ion
P oclama ion in 1863.) Exiled colonis s ied o con ince he king o
F ance, Louis XVIII, o econque he island, eimpose sla e y, and
e-ins i u e he sla e ade. When ecogni ion inally came, i was a
an exo bi an p ice. Unde a ou de o ce ha included 14 wa ships
docked in Po -au-P ince ha bo and he h ea o F ench ein asion,
Hai i’s hen P esiden o Li e, Gene al Boye , accep ed he humilia ing
e ms. In addi ion o F ench ships only paying hal o he docking ees
o o he na ions, Hai i would be liable o an indemni y paymen : 150
million ancs o o me sla e owne s o compensa ion o los p ope y
bo h human and physical. I was an exo bi an sum ha was i e imes
F ance’s o al annual budge .
24 New Na ions (Independence–1870)
In a coun y whe e much o he land had been a ished by he
Re olu ion, imely paymen s we e impossible. Exace ba ing he issue was
he ou lay o mili a y cos s o sus ain independence and o b ing independ-
ence o Spanish San o Domingo. In 1822, he o me Spanish colony on
he eas e n side o he island o Hispaniola began o ganizing an independ-
ence mo emen . Boye and he Hai ian a my joined he cause and San o
Domingo gained independence om Spain. Independence b ough abo-
li ion and San o Domingo was “ olun a ily inco po a ed o he Hai ian
Republic.”3 Dominicans, howe e , came o see uni ica ion as synonymous
wi h Boye ’s opp ession and highe axes, and mo ed owa d sepa a ion
om he Republic. Discon en ega ding supp ession o Spanish cul u al
p ac ices and language was es ic ed o he Dominican side o he island,
bu inhabi an s on bo h sides o Hispaniola complained abou axes.
Boye na ionalized he deb , making all Hai ians now esponsible o i s
paymen , including hose Dominicans in eas e n Hispaniola. The popula-
ion su e ed unde he new axes o pay he deb ; o e p oduc ion o ag i-
cul u al p oduc s led o e osion and s ipped he land; and p in ing money
inc eased in la ion, which made e e yday i ems mo e expensi e. Hai i ook
ou loans wi h in e es om F ench banks o pay, de aul ed on se e al
paymen s, and ied o enego ia e he e ms in wha became known as a
“double deb .” In 1838 a new ea y educed he paymen o 60 million
ancs, bu i was a deb ha would no be paid o un il 1910. When i
was all said and done, Hai i had bo owed o e 166 million ancs o pay
he 60-million- anc deb , wi h o e hal o he paymen s going o F ench,
Eu opean, and la e on, US banks o ees and in e es . Making hese pay-
men s le li le o in es ing in de elopmen .
Fo he popula ion a la ge, he decision o na ionalize deb equa ed
o a daily li e s ill domina ed by ag icul u e. Boye ’s 1826 Ru al Code
p io i ized la ge-scale a ms o be able o mee deb paymen s and c imi-
nalized ag ancy o ensu e ha he e we e enough wo ke s o ag icul u e.
En o cemen was inconsis en , and many peasan s u ned o small-scale
ag icul u al labo . No ma e whe e hey we e, he c ippling deb pay-
men s impac ed e e yone. Hai i used me al-backed cu ency, cu ency
wi h a pe cen age o gold o sil e , o ensu e i s alue, o pay down deb s.
Le wi h minimal specie a e paying hese deb s, Hai i adop ed a pape
cu ency, and inc eased p in ing h ough 1860 led o in la ion. Paying 16
(Hai ian gou des) o a single chicken and simila ly high p ices o ege a-
bles mos impac ed he budge s o he lowe class.4 Inc easing in la ion also
made planning o he u u e isky: why sa e when he e was no gua an ee
ha you money would ha e alue in he u u e? Exace ba ing he issues
was ha he coun y’s e enues we e pa icula ly suscep ible o global luc-
ua ions in co ee p ices, he main expo e enue. Sou he n es a e own-
e s e ol ed in 1843, and o e h ew Boye , bu sho ly he ea e , a mo e
New Na ions (Independence–1870) 25
popula up ising om he egion h ea ened eli e me chan and mili a y
poli ical ule ha ollowed. Known as he Pique mo emen , i was led
by Jean-Jacques Accau, an ag icul u alis and o me membe o he u al
police. Adhe en s ad oca ed o land e o m, na ional educa ion, and
highe p ices awa ded o peasan a me s o hei c ops. The demands
we e unde s andable, bu he na ional deb bu den p e en ed a ull discus-
sion, and concessions ul ima ely quelled he up ising. The eas e n side o
Hispaniola also e ol ed, and he Dominican Republic claimed i s sepa a e
independence in 1844, ma king a ense di ide on he island ha pe sis s
oday.
O he new na ions in La in Ame ica did no su e c ippling deb pay-
men s o he scale o Hai i, bu he logis ical challenges o na ion building
in he wake o independence ba les we e s ill conside able. This mean
ha leade s in he 1820s o en looked ex e nally o unding. By 1825, he
same yea ha Hai i signed he indemni y ag eemen , Colombia, Chile,
Pe u, A gen ina, B azil, Mexico, and Cen al Ame ica all issued go e n-
men bonds o y and aise money o he new na ions. In es o s bough
he bonds on he capi al ma ke s in London and Ams e dam, looking o -
wa d o epaymen s wi h in e es , inc easing he egion’s so e eign deb .
As a egion, La in Ame ica accoun ed o one- hi d o o al in es men on
he Royal Exchange in London. Bu , as hei ou side deb s inc eased, so
oo did he challenges o keeping oge he hese young na ions: in igh ing
was p e alen as egional leade s jockeyed o powe . In e nal con lic s
pe sis ed o mos o he o me Spanish colonies, wi h 20 di e en cons i-
u ions o ming be ween 1820 and 1829. As go e nmen s en e ed in o c i-
ses, deb epaymen s lagged. By 1827, he iskiness o he La in Ame ican
bonds was appa en o ou side in es o s as e e y go e nmen bond issued
by La in Ame ican na ions had no been ully paid and was in de aul .
Wi h ex e nal lende s wa y o de aul , and old ax sys ems abolished,
leade s looked o o he e enues. Di e si ying p oduc ion wi h new ag i-
cul u al p oduc s and na u al esou ces p o ed somewha luc a i e, espe-
cially om 1850 o 1875, e en hough adi ional colonial expo s had
lacklus e pe o mances in he wake o independence. In Hai i, co ee,
co on, and logwoods ook cen e s age; co ee became cen al o B azil
and impo an in Cos a Rica and Colombia; cacao p oduc ion expanded
subs an ially in Ecuado and Colombia; and ca le and ca le byp oduc s
expanded in A gen ina. Taxing ade, bo h expo s and impo s, co e ed
mos na ional de ici s o Chile and B azil and p o ided some elie ac oss
he egion. Howe e , despi e hese shi s, expo g ow h was mu ed and
he g ow h in expo e enues only inc eased by 2.2 pe cen annually,
less han hal he 4.7 pe cen annual a e in he Uni ed S a es. Whe e e
he e had been ba les and igh ing, wha in as uc u e had been p esen
had o en been damaged: mines had been des oyed and ields had been
26 New Na ions (Independence–1870)
bu ned.5 Wi h he excep ion o Pe u’s guano boom in he 1850s and ’60s,
i was axes le ied on impo ed goods ha supplied 80–90 pe cen o ade
axes o go e nmen s. As hese impo a i s we e passed on o consume s
in he o m o highe p ices, i mean inc eased cos s o inished consume
p oduc s like ex iles and wines and inc eased cos s o inno a e in ag icul-
u e and indus ial p oduc ion.
Leade s also looked in e nally o new sou ces o e enue, pa icula ly
o s a e and p o incial unding needs. The non-expo economy, a e all,
was much la ge han he expo ma ke , as daily in e ac ions, a isan-
buil p oduc s, cons uc ion, domes ic se ice, and ansac ions in ma ke -
places, ac oss owns and p o inces domina ed e e yday expe iences and
mone a y exchanges. Coun ies ied o ha ness his po en ial. New axes
on ade be ween p o inces, in e nal sales and ansi axes, p o ided mos
o he p o incial and s a e e enues in e e y coun y bu Chile and B azil.
These new sou ces o e enue, howe e , made ade be ween p o inces and
s a es mo e cos ly and he pace o in e nal ma ke de elopmen was slowe
han ex e nal ma ke de elopmen . Mexico, o example, in oduced a ax
on pulque, a popula p e-colonial e men ed be e age om aga e. Bu pul-
que was la gely consumed by Mexico’s Indigenous and mes izo popula-
ions; hus, g oups ma ginalized in he hie a chical social s uc u e we e
also a ge ed economically wi h hese new axes. The ise in cos s o basic
needs associa ed wi h he in e nal sales and ansi axes would also ha e
p o ed a g ea e bu den on he majo i y a he han eli es. Ul ima ely,
economic changes did li le o challenge endu ing social s uc u es ha
ewa ded social connec ions and disc imina ed agains he egion’s poo
popula ions, many o whom we e Indigenous, Black, o o mixed descen .
How we e na ional budge s alloca ed? In gene al, o e 50 pe cen o he
new coun ies’ budge s wen o he mili a y, and du ing pe iods o in ense
s i e, he sha e inc eased o upwa ds o 70 pe cen . Dea h and con lic
did no s op wi h independence. In Hai i, o example, mili a y campaigns
o e ain San o Domingo, he o me Spanish colony on he eas e n side
o he island, equi ed in es men . So oo did he h ea o ein asion
om F ance, a plausible h ea gi en con inued Eu opean incu sions in
he egion well a e independence (see Figu e 2.1). No only was 25 pe -
cen o Hai i’s adul male popula ion employed in he mili a y o na ional
gua d, bu e enues no being di ec ed owa d indemni y paymen s o en
wen o he mili a y. In 1837, mili a y spending accoun ed o 60 pe cen
o Hai i’s budge . These commi men s le e y li le o in es men s in
in as uc u e, educa ion, and o he se ices. As one diploma no ed o
he s ee s in he capi al in 1866, “They ha e once been pa ed, and now
neglec ed, and a e now mo e ough and une en han i hey had ne e been
pa ed a all.”6 I would no be un il 1860 ha he Hai ian economy would
g ow. Only a e he s anding mili a y was educed o hal i s size, quali y
New Na ions (Independence–1870) 27
con ols on expo s we e implemen ed, and he p in ing o pape cu ency
was limi ed did in es men s in in as uc u e, ee schools, and se ices
become easible.
B azil, by a he mos s able na ion in he egion, was he only coun y
o esol e i s deb s in a imely ashion, so i was able o con inue o issue
o eign deb , bu he c edi wo hiness o o he na ions was ques ionable a
bes .7 The hemisphe ic de aul s led o eign in es o s la gely o s ay away
om La in Ame ica un il he middle o he nine een h cen u y. A ound
he 1850s, while Cen al Ame ica, Ecuado , and Boli ia emained poli i-
cally uns able, he Sou he n Cone, B azil, and Cuba (s ill a Spanish colony)
achie ed ela i e s abili y. This b ough a second ound o loans issued o
hose mo e s able coun ies be ween 1850 and 1875. Na ions no only
secu ed loans o e inancing exis ing loans in a ea s, bu inally began
in es ing in public wo ks p ojec s. Whe eas 68 pe cen o he nine loans
issued o he egion in he 1850s we e di ec ed owa d e inancing pas
deb s and 32 pe cen owa d public wo ks, he a io had lipped by he
1870s, wi h 60 pe cen o he 22 loans di ec ed owa d public wo ks p o-
jec s, p edominan ly ail oad cons uc ion and po mode niza ion.
Güines Rail oad Opens in Cuba, 1837 (Ha ana, Cuba)
On No embe 19, 1837, he i s ail oad in La in Ame ica opened, linking
Bejucal o Ha ana, Cuba. Cons uc ion began in 1834 and was pe o med
la gely by local jou neymen, ensla ed (including hose en ed ou by
hei ensla e s), and eedmen. The o icial Jun a de Fomen o and p i a e
Figu e 2.1 The Spanish bomba ding Pe u’s p incipal po , Callao, in Ma ch 1866.
The a ack ollowed a simila one on Valpa aíso in Chile. The h ea o
Eu opean in asion well in o he nine een h cen u y helped keep La in
Ame ican mili a y budge s high. Bomba dmen o Callao, May 2. Callao
Bay Pe u, 1868. Pho og aph. Lib a y o Cong ess, LC-USZ62-136429.
28 New Na ions (Independence–1870)
con ac o s, mos ly om he Uni ed S a es, o e saw he p ojec . Jus o e
15km o ack, he Güines Rail oad connec ed a po ion o Cuba’s suga -
p oducing in e io o he po o Ha ana. C eole suga p oduce s had
become i ed o “ca s b oken in o pieces, des oyed suga c a es, wo n
ou animals, los days ha d ag on and cause incalculable losses o he
labo ious a me ,” challenges hey equa ed wi h he poo oad sys em.8
Main aining adi ional oads was cos ly, equi ed conside able labo , and
had yielded subpa esul s. The Spanish, who s ill uled he island, we e
commi ed o making Cuban suga p o i able in an inc easingly compe i-
i e global ma ke . The commi men was such ha Spain suppo ed ail-
way cons uc ion in hei colony nine yea s be o e he i s acks would
open in he me opolis.9 By 1870, Cuba, i onically s ill a colony, accoun ed
o one-qua e o La in Ame ica’s ailway lines: a jus 1,250km long, he
island o Cuba had almos 1,300km o ailway ack. The Güines Railway
demons a es ha when go e nmen s could, hey gene ally in es ed in spe-
ci ic ypes o public se ices. Despi e legisla ion connec ing he s a e o
public p o ision o educa ion, when unds we e a ailable, in as uc u e
such as ailways and po s o en ook p io i y. This le La in Ame ica’s
educa ional sys em la gely unde de eloped by he end o he pe iod in
1870.
Be ween 1850 and 1875, a new ound o o eign inancing became a ail-
able o La in Ame ican na ions. In he 1850s, loans ha did no go owa d
e inancing deb , which cons i u ed 68 pe cen o loans, we e di ec ed
owa d public wo ks. In he 1860s, despi e a ise in mili a y spending,
12 pe cen o loans s ill wen owa d public wo ks. In A gen ina, Boli ia,
Chile, Cos a Rica, Gua emala, Hondu as, Pa aguay, and he Dominican
Republic, o e hal o all unds secu ed h ough loans be ween 1850 and
1875 was spen on building in as uc u e o domes ic and ex e nal ade,
mos ly ail oads and po s. La in Ame ican geog aphies challenged ans-
po a ion: moun ains and high pla eaus impeded cons uc ion, i e s we e
o en unna igable, o only pa ially so du ing ce ain imes o yea , and
swampy a eas and ainy seasons made main enance nea ly impossible.
Secu i y was poo on abysmally main ained oads and mules we e o en
he bes al e na i e o m o anspo as e en ca s’ wheels we e unable
o eliably a e se ade ou es. I was no wonde ha coun ies looked
owa d ailway anspo as a welcome boon.
I would ake un il he 1850s o he i s lines in many coun ies o
open. A new ound o loans om o eign in es o s o en helped inance
hese en u es, bu cons uc ion equen ly emained limi ed h ough 1870.
Colombia opened ack on he Panama is hmus in 1855, bu by 1870,
coun ed jus 55km o ail in se ice. B azil inaugu a ed i s i s ailway in
1854, bu he coun y, o e 75 imes la ge han Cuba, had jus o e hal
he ailway in se ice as he small suga -p oducing colony by 1870. Va ied
New Na ions (Independence–1870) 29
opog aphies challenged mo e ex ensi e expansion, bu hese ea ly in es -
men s would p o e p o i able in coun ies able o cons uc ailways. In
Pe u and Hondu as, ailway lines ailed o ma e ialize as i was co up ion
and g a , a he han he en i onmen , ha e oded cons uc ion.
Compe ing wi h in as uc u e in na ional budge s we e o he public
goods p o isions like sani a ion, educa ion, heal h, jus ice, and sa e y.
The budge a y commi men s anged be ween non-exis en o minimal.
Educa ion o e s an ins uc i e example o he end owa d unde de el-
opmen in he egion. Du ing he nine een h cen u y, La in Ame ica ell
behind he de eloped wo ld in e ms o a e age yea s o schooling. By he
end o he cen u y, he a e age ci izen in de eloped coun ies had a ended
school o almos six and a hal yea s, bu in La in Ame ica, he ypical
adul did no e en ha e a ull yea ’s school educa ion. In U uguay, which
boas ed he highes educa ional achie emen a es, he ypical pe son had
ecei ed jus 2.4 yea s o schooling, a ull ou yea s less han hei coun e -
pa in he Uni ed S a es o Wes e n Eu ope. Sys ema ic educa ion da a on
his e a can be di icul o ind, bu he misma ch be ween legisla ion and
educa ional achie emen s suppo s he in e p e a ion ha La in Ame ica
ell behind h oughou he cen u y and no jus in he las h ee decades (a
pe iod co e ed in he nex chap e ).
Legisla i ely, nominal suppo o educa ion appea ed in a hand ul
o coun ies sho ly a e independence. Pe u suppo ed “ ee p ima y
ins uc ion o all ci izens” as ea ly as 1828, Ecuado passed a law o pub-
lic educa ion in 1835, and Chile passed a simila law in 1833. By 1870,
Cuba, Boli ia, Mexico, Cos a Rica, and Venezuela had simila laws ha
expanded public p ima y educa ion. E en Hai i, saddled wi h deb pay-
men s, opened i s Minis y o Public Educa ion in 1843. T ans o ming
hese laws and minis ies in o e ec i e schooling o child en o en p o ed
impossible du ing his e a. E en in Chile, which was one o he i s coun-
ies o uly de elop a public educa ion in as uc u e and sys em, jus 0.4
pe cen o GDP was spen on public educa ion. In Hai i, be ween 5 and 10
pe cen o public e enue was budge ed o schools, bu by 1866, jus 2.69
pe cen o he school-aged popula ion was en olled.10
Di e ences be ween expendi u es and budge s show adequa e and con-
sis en unding as a majo challenge acing public schools. Na ional, s a e,
p o incial, and local go e nmen s o en le oom in hei budge s o
schools, bu ac ual expendi u es did no keep pace. This lack o unding
o public schools was no a bu den o he eli e, who sen hei child en
o p i a e schools, hi ed u o s, o e en sen hem o Eu ope o school.
Those who los ou we e he sons and daugh e s o labo e s o peasan
a me s whose chances o social mobili y emained inc easingly con-
s ained as La in Ame ica mo ed owa d g ea e in eg a ion in o global
ma ke s and as manu ac u ing ook oo . Fo young boys and young men,
36 New Na ions (Independence–1870)
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So e eign Deb Ma ke s, 1820–1830.” The Jou nal o Economic His o y 69,
no. 3 (2009): 646–84.
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and Uni e sidade Jo ge Tadeo Lozano, 2010.
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3
Be ween 1870 and 1930, ela i e poli ical s abili y and echnological
ad ancemen s ushe ed in a new phase in La in Ame ica’s economic his-
o y: expo -o ien ed g ow h. A land-abundan egion wi h ich mine al
weal h and ag icul u al po en ial, La in Ame ica could expo aw ma e i-
als, oods u s (cacao, whea , co ee), and mining commodi ies (coppe , sil-
e , ni a es) ha indus ialized na ions and hei popula ions demanded.
La in Ame ica’s expo s pe capi a mo e han doubled be ween 1870 and
1912, and he egion’s sha e o wo ld expo s accoun ed o nea ly 8 pe -
cen by 1930. Coun ies ended o specialize in one o h ee expo s, mak-
ing hem highly suscep ible o changes in ma ke p ices. In B azil, whe e
co ee comp ised o e 60 pe cen o all expo s, he go e nmen enac ed
ex eme measu es – buying and e en bu ning excess co ee o a i icially
con ol global co ee p ices when bumpe c ops o declining p ices h ea -
ened e enues.
Du ing he same pe iod, immig a ion and some imp o emen s in li e
expec ancy mean g owing popula ions. The g owing demands o bo h
he expo and domes ic ma ke s led o conside able changes in how land,
labo , capi al, and en ep eneu ship we e used. These inpu s, when con-
side ed collec i ely, a e known as ac o s o p oduc ion.1 In La in Ame ica
du ing his pe iod, expanding p oduc ion o en elied on changes o he
labo , land, and capi al pa s o he equa ion ha u he ma ginalized
some popula ions and o en saw expo in e es s ump domes ic demands.
When da a a e a ailable, o example, i shows ha while expo p oduc-
ion pe capi a inc eased, o e all p oduc ion pe capi a la gely dec eased.
A e Wo ld Wa I, A gen ina, U uguay, and Mexico saw imp o emen s in
GDP pe capi a, bu ha me ic con inued o decline in B azil and Cuba.
The nex wo chap e s explo e he in e play o ac o s o p oduc-
ion du ing La in Ame ica’s pe iod o expo -led g ow h. Re lec ing an
impo an change o labo was B azil’s 1871 Rio B anco law. This ee
womb law ma ked an impo an s ep owa d comple e aboli ion in 1888.
Independence had se o a p ocess o g adual aboli ion in much o La in
3
Expo -led G ow h (1870–1930):
Pa I
This chap e has been made a ailable unde a CC-BY-NC-ND 4.0 licence.
DOI: 10.4324/9781003283843-3
10.4324/9781003283843-3
Expo -led G ow h (1870–1930): Pa I 39
Expo -led G ow h (1870–1930):
Pa I
Ame ica, bu B azil and Cuba con inued o impo ensla ed A icans
h ough he middle o he nine een h cen u y, p ima ily o wo k on co ee
and suga plan a ions, espec i ely. Like o he coun ies ha had al eady
abolished sla e y, bo h simul aneously explo ed al e na e labo egimes.
A combina ion o mig an and immig an lows (wi hin and o he egion)
ensu ed an abundance o low-wage labo o bo h he expo and domes-
ic ma ke s. These lows acili a ed a end o gene al labo exploi a ion,
while disc imina ion c ea ed di e en ia ed labo expe iences.
Accompanying his labo ansi ion we e impo an capi al changes
acili a ing la ge -scale p ojec s. As ains and s eamships educed ans-
po a ion cos s, and libe al e o ms allowed o educed isk, in es o s,
pa icula ly o eign in es o s, ook no e and La in Ame ican capi al ma -
ke s g ew. The 1891 Ba ing C isis demons a es he scale o ha in es -
men , he global in e connec edness ha la ge coun ies in he egion
achie ed in a ela i ely sho amoun o ime, and he egion’s suscep ibil-
i y o ola ili y.
Bo h ansi ions highligh he ole ha Eu opeans and Eu ope played in
he egion’s expo -led g ow h pe iod, pa icula ly in he Sou he n Cone.
The connec ion included he millions o I alian, Spanish, and Po uguese
immig an wo ke s lowing o he po s o Buenos Ai es, Mon e ideo, Rio
de Janei o, Ma acaibo, and Ha ana. I in ol ed he impo ed consume
p oduc s, machine y, and oods u s ha he domes ic ma ke could no
supply, and i encompassed he B i ish and Eu opean capi alis s in es ing
in ailways and o he indus ial en u es. The A lan ic ie was s ong, only
ully dis up ed by Wo ld Wa I, which signi ican ly slowed he low o
people, impo s, and capi al alike.
Rio B anco Law, 1871 (Rio de Janei o, B azil)
On Sep embe 28, 1871, B azil’s Cong ess passed he Rio B anco Law
decla ing ha any child bo n in B azil a e he da e was ee, as long as
hey ga e hei se ices o hei mo he ’s mas e s om ages 8 o 21 yea s.
This was he las ee womb law passed in he egion and a c i ical s ep
owa d ull aboli ion o sla e y. On May 13, 1888, B azil would be he las
coun y o abolish sla e y in La in Ame ica. The Rio B anco Law demon-
s a es no only he challenges ha sla e y and con inued disc imina ion
b ough o he egion’s de elopmen , bu also highligh s he ansi ion o
wage-based labo in he egion ha gained ac ion owa d he end o he
nine een h cen u y.
Ten yea s a e he law was passed, an ensla ed woman li ing in Rio de
Janei o, Cândida, ga e bi h o a daugh e , Geo gina. Geo gina was ech-
nically bo n ee, bu his did no s op he mo he ’s mas e om auc ioning
o he se ices in Rio’s Jo nal do Come cio o he highes bidde in 1882.
In he same yea , one-yea -old Adele Be oldi a i ed in São Paulo om
40 Expo -led G ow h (1870–1930): Pa I
I aly along wi h he amily o i e.2 They had le Genoa and we e on hei
way o Campinas, likely o ind wo k on he co ee plan a ions. Al hough
hese wo young gi ls ne e me , hei li es and hei amilies’ li es, and
hose o housands like hem, we e inex icably shaped by sla e y.
Ou side o Hai i, aboli ion did no come wi h a e ol . In mos coun ies
i was a g adual p ocess ha included de ju e and de ac o aboli ion o
he ansa lan ic sla e ade, ee womb laws, and inally dec ees o abo-
li ion. Aboli ionis s, libe als, and ensla ed people alike made signi ican
con ibu ions owa d he p ocess, wi h ensla ed pa icipa ion in mili a y
campaigns playing pa icula impo ance. Fo hose coun ies no hea ily
elian on sla e y in he la e colonial pe iod, independence was an impo -
an s ep owa d aboli ion. Mexico, Chile, and Cen al Ame ica abolished
sla e y a o sho ly a e independence. Independence also ac o ed in o
g adual aboli ion in U uguay, Ecuado , Colombia, A gen ina, Pe u, and
Venezuela. Du ing he Independence Wa s, oyalis s o en ex ended he
p omise o emancipa ion i he ensla ed would join hei anks. As he
wa s waged on, leade s like Simón Bolí a came o unde s and ha aboli-
ion would be key o success ul libe a ion om Spain, passing ee womb
laws wi h independence. The iming mean aboli ion was achie ed in he
middle o he nine een h cen u y in much o he egion du ing he e a o
libe alism. Sla e y pe sis ed abou a decade longe in Boli ia and Pa aguay,
bu he size o he ensla ed popula ion was small in each o hese coun ies.
A he ime o he Independence Wa s, sla e y was much mo e p omi-
nen in he Ca ibbean and B azil. In he case o he Dominican Republic,
aboli ion came when Hai i occupied San o Domingo, b inging eedom o
hose li ing on he eas e n side o Hispaniola. Fo Pue o Rico, Cuba, and
B azil, he ins i u ion pe sis ed in o he expo -led g ow h pe iod. Pue o
Rico and Cuba emained colonies o Spain un il 1899. Un il 1889, B azil
was i s own empi e wi h a cons i u ional mona chy. Ou side o Hai i, he
h ee we e also he blackes . Roughly hal o Cuba’s and Pue o Rico’s
popula ions and abou 60 pe cen o B azil’s popula ion we e Black o
A o-descended. As o he na ions ook s eps owa d aboli ion, Cuba and
B azil saw an inc eased dependence on sla e y in he i s hal o he nine-
een h cen u y. This g ow h occu ed despi e echnical aboli ion o he
ansa lan ic sla e ade in 1820. The sha e o disemba ka ions inc eased
o bo h coun ies in he 1830s. Known sla ing oyages con inued o occu
h ough 1850 in B azil and 1866 in Cuba. I was no un il he e ec i e end
o he ansa lan ic sla e ade ha s eps owa d aboli ion gained popula -
i y in Cuba and B azil.
Bo h a eas had bene i ed om ela i e s abili y in he nine een h cen-
u y and had h i ing expo ag icul u al sec o s ha equi ed subs an ial
labo o ces. Cuba illed much o he suga indus y oid ha Hai i le
a e he Hai ian Re olu ion, becoming he wo ld’s la ges suga p oduce
Expo -led G ow h (1870–1930): Pa I 41
in he 1850s. O e 800,000 ensla ed A icans would be b ough on o he
island, making 43 pe cen o he popula ion ensla ed. In B azil, co ee p o-
duc ion expanded subs an ially, becoming B azil’s chie expo by 1833.
O e 2.4 million ensla ed A icans would come o B azil in he nine een h
cen u y. While he numbe was subs an ial, B azil’s dependence on sla e y
a his momen concen a ed in he sou heas and e en he e, p o incial
di e ences saw diminished dependence on sla e y once he sla e ade was
e ec i ely abolished. In 1825, one- hi d o B azil’s A o-descended popu-
la ion was ensla ed; in 1850 he sha e was 25 pe cen and one yea a e
B azil passed i s ee womb law, he sha e had diminished u he o 15
pe cen .
As in he case o aboli ion elsewhe e in he egion, mili a y se ice
ac o ed in o aboli ion in bo h coun ies. In B azil, many owne s o e ed
ensla ed wo ke s eedom o ake hei place in he unpopula Pa aguay
Wa (1864–1870). When hese e e ans e u ned iumphan , and now
ee, many mo ed o u ban cen e s and p essu ed o gene al aboli ion. In
he case o Cuba, ebels o e ed emancipa ion o men who would join hei
igh agains Spain o independence in he Ten Yea s’ Wa (1868–1878).3
Spain p o ided a coun e o e o e en ual aboli ion, passing he Mo e
Law ( ee womb) in Cuba and Pue o Rico in 1870, jus one yea be o e
B azil’s Rio B anco Law.
Aboli ion c ea ed a new po en ial wo k o ce in hese coun ies, bu
p ejudice, disc imina ion, and low human capi al – aining, educa ion,
heal h, and expe ience accumula ed o e a li e ime – could p e en he ull
in eg a ion o many o he o me ensla ed. Fo B azil’s Sou heas , schol-
a s ha e also ound occupa ional disc imina ion inc eased o Blacks a e
aboli ion. While excluded om libe al p o essional and heal hca e jobs,
Blacks we e o e ep esen ed in domes ic se ice. A i s Black Cubans
seemed o a e a bi be e in e ms o educa ion. In 1861, 38.5 pe cen o
whi es abo e he age o 7 we e li e a e, while he a e o Blacks was a me e
5.3 pe cen . By 1907, almos 70 pe cen o Cuba’s whi e 10–19-yea -olds
we e li e a e, and he a e o non-whi e Cubans jus a bi behind a 67
pe cen . Gains we e subs an ial o boys and gi ls, whi e and non-whi e,
bu his achie emen did no necessa ily ansla e in o highe educa ion o
equal job oppo uni ies. A he uni e si y le el, despi e being mo e han
25 pe cen o Cuba’s popula ion, he only deg ee whe e non-whi es ep-
esen ed mo e han 15 pe cen o he s uden popula ion was in den is y:
in law, medicine, enginee ing, and e en in ag icul u al expe ise, whi es
achie ed 89–98 pe cen o deg ees. The gap widened a e 1907, and by
1931 whi e Cubans we e 4 pe cen age poin s highe han non-whi es in
e ms o ob aining uni e si y i les.
The inabili y o ully include emancipa ed sla es and hei descendan s
is u he complica ed by he mul iple immig a ion p ojec s ha de ined
42 Expo -led G ow h (1870–1930): Pa I
he e a. E en be o e aboli ion, inc eased labo needs om an expanding
expo ma ke mo i a ed plan a ion owne s o explo e al e na e labo
o ces. In B azil, ail oads expanded he co ee on ie in o São Paulo and
Minas Ge ais. The expansion c ea ed conside able labo demand o bo h
build he ailways and wo k he co ee ha es . In Cuba, ail oads along
wi h imp o ed suga mill echnology allowed o suga cane cul i a ion on
he island’s eas e n on ie s. Chinese “coolies,” unskilled labo e s o en
o ced in o sla e-like deb peonage, and unskilled Spanish immig an s,
many o whom we e inden u ed se an s, a i ed on he island.4 They buil
ail oads and wo ked on suga plan a ions. In Miguel Ba ne ’s Biog aphy
o a Runaway Sla e, Es eban Mon ejo ecoun s his li e on Cuban plan a-
ions. No only a e Lucumí, Ca abalí, and Congo p ac ices de ailed, bu so
oo is he p esence o Chinese coolies. In all, o e 700,000 Chinese would
come o La in Ame ica, hei p esence becoming mos signi ican in Cuba
and Pe u.
In addi ion o Chinese a i als, coloniza ion s a egies we e discussed
and es ablished in mos La in Ame ican coun ies. Go e nmen s in Chile,
B azil, and e en Pa aguay and Mexico, coun ies wi h conside able mes-
izo and Indigenous popula ions, es ablished immig an se le colonies
beginning in he 1830s. Libe al poli icians lauded immig a ion as a pa o
hei ansi ion owa d mo e mode n ag icul u e. Ge man colonies ound
success in Chile and sou he n B azil. Chile suspended i s es ic ion o
non-Ca holic immig an s o encou age se lemen in i s sou he n egions.
Welsh colonies in Pa agonia and F ench colonies in A gen ina we e also
success ul. As aboli ion p og essed, o me in es o s in he sla e ade and
sla e owne s looked o al e na e ways o in es hei money, including
immig a ion and anspo a ion companies. I is unsu p ising, hen, ha
s a ing in 1840, Eu opean a i als su passed A ican a i als in La in
Ame ica.
In B azil, while Chinese coolies we e in oduced and some se le colo-
nies ound success, i was he Eu opean immig an se le amilies a i -
ing a e 1871 who began he ue ansi ion away om ensla ed labo .
In he same yea ha B azil passed i s ee womb law, São Paulo co ee
plan e s es ablished he Socie y o Aid Immig a ion. The socie y was o
subsidize Eu opean colono ag icul u al amilies o wo k on co ee plan a-
ions. These se le communi ies b ough g oups o a simila backg ound
oge he o de elop he co ee economy. I amilies ag eed o sign a con ac
o wo k on he plan a ion o a yea , he socie y would pay o ansa lan-
ic passage, co e ood cos s, and connec he amily o co ee plan a ion
owne s. Rec ui ing Eu opean amilies would encou age pe manency, keep
a la ge supply o unskilled labo (keeping labo cos s low), and would
wo k owa d an o icial policy o “whi ening” ha alo ized whi eness
a he expense o A o- and Indigenous-descended popula ions. While no
Expo -led G ow h (1870–1930): Pa I 43
consciously awa e o hese cu en s, he young Adele Be oldi and he am-
ily we e pa o his mo emen .
Families accep ing he B azilian subsidies we e o en Eu opeans o
he leas means, o whom paid passage was he only iable op ion o
mig a ion ac oss he A lan ic. Those in be e ci cums ances o en op ed
o inance he oyage hemsel es o h ough social ne wo ks. Mos headed
o A gen ina, B azil, and U uguay, al hough Cuba became a mo e popula
des ina ion a e 1900. The global dep ession o 1873, demog aphic p es-
su es in Eu ope, he ag icul u al e olu ion, and indus ializa ion pushed
hem ou o Eu ope. La in Ame ica, now mo e s able, pulled hem owa d
jobs as o eign and domes ic en ep eneu s in es ed in ail oad and expo -
o ien ed p oduc ion. U baniza ion and mo e di e se indus ializa ion o
domes ic ma ke s ollowed, making La in Ame ica’s Sou he n Cone an
impo an node in he in e na ional labo ma ke whe e wo ke s consid-
e ed ela i e wages in hei calcula ions o mig a e. Imp o ed s eamships
made A lan ic passages cheape , making seasonal mig a ion a common
phenomenon, pa icula ly among I alian immig an s (pa icula ly in
A gen ina). As many as 50 pe cen o a i ing I alian mig an s e u ned,
bu his also mean ha 50 pe cen s ayed.
Popula ion g ow h was one o he main d i e s o p oduc ion g ow h
du ing he pe iod. La in Ame ica’s popula ion g ew by 1.5 pe cen du -
ing he pe iod o expo -o ien ed g ow h, bu he a e was almos dou-
ble ha igu e in A gen ina, U uguay, and Sou heas B azil, he cen e s
o Eu opean immig a ion. Fo A gen ina and U uguay, hese mo emen s
mean he Eu o-descended popula ion came o domina e he wage labo
ma ke . Whea , linen, and co n p oduc ion in hese empe a e clima es had
a compa a i e ad an age and La in Ame ica’s new on ie o e ed highe
ela i e wages han Eu ope. P oduc s g own in opical clima es, howe e ,
we e o en in compe i ion wi h hose g own in A ica and Asia, egions
ha could p oduce simila p oduc s mo e cheaply due o lowe labo cos s.
Immig an s used social ne wo ks and immig an ec ui men companies
o lea n whe e hey could ea n he highes eal wages, bu hey also consid-
e ed ac o s such as language and cul u al compa ibili y. No he n I alians
wi h indus ial skills could coun on s i compe i ion and disc imina ion
in he Uni ed S a es, bu hey ound eady wo k in ail oad companies o
in apidly indus ializing Sou he n Cone ci ies like Buenos Ai es and São
Paulo. An immig an ’s own wo ds in a le e o his pa en s in 1910 bes
de ails he impo ance ha amily, home own, and language p oximi y
played in he labo ma ke :
I am no longe in Buenos Ai es since I ha e aken on a p ojec o he
cons uc ion o a ail oad o go om San a Fe o Dean Funes … Righ
Now I ha e i y-se en wo kmen, bu in a li le while he e will be many
mo e. The e a e also some Biellesi5 wi h me, all masons, who came
44 Expo -led G ow h (1870–1930): Pa I
especially o his … Fo his p ojec … I ha e as my chie assis an and
iend an old school iend M . Secondo C a ello.6
Eu opeans and Chinese we e no he only a i als o he egion. No able
Japanese and Lebanese mig a ions also occu ed. S a ing in 1908, as
he Uni ed S a es closed i s doo s o Japanese immig an s h ough he
Gen leman’s Ag eemen , a bila e al ag eemen be ween Japan and B azil
b ough Okinawans o wo k on co ee plan a ions. Japan also nego ia ed
wi h A gen ina, Chile, Ecuado , Mexico, and Pe u, bu B azil became he
dominan ecei e o Japanese mig a ion o he Ame icas. He e, he colono
model, a he han male con ac labo e s, became he dominan mig a ion
o m. O e he cou se o he wen ie h cen u y, o e 200,000 Japanese
would a i e in B azil, wi h São Paulo oday housing he la ges popula-
ion o Japanese ou side o Japan.
Like Lebanese and Chinese a i als o B azil and o he egion, Japanese
occupied an ambiguous acial ca ego iza ion. They we e no whi e, Black,
o Indigenous, an iden i y ha hey e ained h ough high endogamy a es.
Hyphena ed iden i ies did no p o ec hem om disc imina ion, bu o en
p o ed ad an ageous in he ag icul u al and business ealms. Japanese dis-
p opo iona ely owned co on and ice a ms in Pe u and B azil, espec-
i ely, and Lebanese came o ind conside able comme cial success in d y
goods, and hen ex iles. Comme cial success pa ed he way o poli i-
cal oppo uni ies. One hund ed yea s la e , leade s like Mexico’s business
magna e Ca los Slim o ex-p esiden s such as Albe o Fujimo i in Pe u and
Ca los Menem in A gen ina, ace hei oo s o hese mig a ions. In luence
o non-Eu opean immig a ion is palpable in e e y ealm, om neighbo -
hoods like São Paulo’s Libe dade and Ha ana’s Ba io Chino o ood a-
di ions like Mexico’s acos á abes, and e en in he hy hms o ea ly music
eleased by Colombia’s iconic a is Shaki a (Isabel Meba ak Ripoll).
Immig a ion’s g ea es ela i e impac was in A gen ina, whe e o e 3.8
million immig an s se led be ween 1881 and 1930, al hough he in lux o
B azil’s Sou heas egion was also subs an ial. Be ween 1860 and 1900,
A gen ina had he highes immig a ion a e in all he Ame icas (includ-
ing he Uni ed S a es). By he s a o Wo ld Wa I, almos one- hi d o
A gen ina’s popula ion and eigh ou o en adul males we e o eign-
bo n. Immig an s came o wo k on he expanding ag icul u al on ie
o as labo e s in he bu geoning indus ial sec o . Mos e en ually ound
jobs in ci ies, in companies owned by hei mo e a luen compa io s;
when employmen was unp edic able, hey mo ed o made hei own
oppo uni ies.
E en in coun ies wi h smalle immig a ion a es, he economic impac
could be disp opo iona ely la ge. While jus 7 pe cen o Chile’s popu-
la ion was o eign-bo n in 1907, by 1914, o eigne s owned 32 and 49
Expo -led G ow h (1870–1930): Pa I 45
pe cen o comme cial and indus ial i ms, espec i ely. I was in hese
es ablishmen s and in neighbo hoods whe e immig an na ionals o en
bonded, es ablishing a a ie y o o mal ins i u ions om mu ual aid soci-
e ies and schools o o eign-language newspape s and socce clubs. While
socce i s a i ed in he con inen h ough B i ish ailway companies,
i was in neighbo hood and ac o y clubs ha i ook on na ional sig-
ni icance. Many o oday’s p ominen socce clubs, like B azil’s Vasco da
Gama and Palmei as, Chile’s Club Pales ino, and A gen ina’s San Lo enzo,
ace hei oo s o e hnic clubs. E en in Mexico, which ne e expe ienced
wide-scale immig a ion, mine s om Co nwall, England wo king in
Pachuca’s mine owned by William Blamey, a B i ish na ional, we e a he
hea o es ablishing he Pachuca A hle ic Club in 1901. The club’s legacy
con inues oday as Pachuca F.C., consis en ly compe ing in Mexico’s op
socce di ision.
Ba ing C isis, 1891 (London, England)
When Eu ope began o eme ge om he Dep ession o 1873, immig an s
we e no he only ones who ound La in Ame ica a ac i e: he esou ce-
ich egion d ew Eu opean and Ame ican in es o s, oo. To in es
equi ed sol ing a inancial conund um. Mos La in Ame ican coun ies
had achie ed ela i e poli ical s abili y, bu many na ional go e nmen s
con inued o de aul on loan paymen s.7 In es men , hus, sky ocke ed in
p i a e ini ia i es, pa icula ly in A gen ina, Mexico, B azil, Chile, and
U uguay. Abou one- hi d o he egion’s capi al s ock, he sha es issued
o inance ini ia i es and g ow h, was o eign. Rail oads accoun ed o
o e 60 pe cen o London in es men s in he egion. In es o s also unded
public u ili ies, indus ial en u es, and u ban enewal campaigns. The la -
e added a Pa isian and Eu opean lai o colonial s ee pa e ns as s ee s
widened, wa e supplies and public ligh ing imp o ed, and public pa ks
and municipal ope a houses opened. A ac ing mo e in es men equi ed
a ac i e ci ies and mode n com o s. These ini ia i es we e u he jus i-
ied by eme ging pseudo-scien i ic ideas ha mo e mode n and “ci ilized”
s uc u es could ele a e he local popula ions, he majo i y o whom had a
mix u e o Eu opean, A ican, and Indigenous backg ounds.
As ea ly as he 1860s some o eigne s we e a ac ed o in es men
ha could be cha ac e ized as in es ing in in as uc u e (like ail oads)
o g ow expo economies (whea , hides, co on, suga , e c.). The a ion-
ale was ha e enues would inc ease om hose expo s and coun ies
would be able o pay back he loans wi h in e es . Du ing his decade,
A gen ina ep esen ed 30 pe cen o o eign loans. By he 1870s, expo -
gene a ed e enues lagged and, hoping o con inue o expand, A gen ine
leade s aised expo p oduc ion and inc easingly u ned o s a e banks
a he han o eign lende s. Then an A gen ine banking e o m allowed
4
This chap e again uses he p oduc ion unc ion o be e unde s and how
he dynamics o land, labo , capi al, and en ep eneu ship shaped he
expo -led g ow h pe iod o he egion’s economic his o y. On he capi-
al and land side o he equa ion, smalle coun ies we e o en unable o
inance subs an ial loans in Eu opean capi al ma ke s. To connec o global
ma ke s, many o e ed concessions o o eigne s and companies like he
Uni ed F ui Company (UFC) o build simila in as uc u e p ojec s ha
la ge coun ies enjoyed. In he case o he UFC, wha s a ed as a ailway
en u e came o include conside able ac s o land e ec i ely con olled
by he in e na ional conglome a e. Nego ia ions we e o en wi h Uni ed
S a es’ businessmen and co po a ions, pa ially a unc ion o he sha ed
bo de wi h Mexico and coas line a ound he Ca ibbean Sea. By he onse
o Wo ld Wa I, he Uni ed S a es al eady had signi ican in luence in he
ci cum-Ca ibbean;1 he wa opened he doo o expand u he sou h.
The UFC also se es o highligh an impo an egional p oduc ion
pa adox. La in Ame ican expo s wielded conside able in luence o e eco-
nomic and poli ical decisions, bu 80 pe cen o na ional p oduc ion was
o domes ic ma ke s. This mean mos o he popula ion, he labo side o
he p oduc ion equa ion, was engaged in la gely non-expo ag icul u al
p oduc ion, and inc easingly, in he se ice and indus ial sec o . Howe e ,
hey did no eap he same bene i s as land-holding eli es, indus ialis s, o
e en labo e s employed in he expo sec o . In Mexico, he inde box o
pe sis en inequali y, land accumula ion, ma ginaliza ion, combined wi h
poli ical us a ion, e up ed in he 1910 Mexican Re olu ion.
Mexican de elopmen o he pe iod demons a es g owing dispa i ies,
and hose a ailable o he egion as a whole poin o mixed esul s du -
ing he expo -led g ow h pe iod. Cumula i ely some ad ancemen s we e
made in e ms o educa ion and mo ali y, bu a close look e eals g ow-
ing dispa i ies be ween and wi hin coun ies. Labo e s, wo ke s, and he
lowe class exp essed discon en in he o m o s ikes, a s a egy used
wi h inc easing equency a e he onse o Wo ld Wa I. As Pe u’s 1919
4
Expo -led G ow h (1870–1930):
Pa II
This chap e has been made a ailable unde a CC-BY-NC-ND 4.0 licence.
DOI: 10.4324/9781003283843-4
10.4324/9781003283843-4
Expo -led G ow h (1870–1930): Pa II 53
Expo -led G ow h (1870–1930):
Pa II
Gene al S ike demons a es, u ban wo ke s began o achie e some mod-
es success wi h labo mo emen s, while mos o hei u al coun e pa s
con inued o ace exploi a ion and s ike ep ession.
Uni ed F ui Company Inco po a ed, 1899 (Bos on, Massachuse s,
Uni ed S a es)
In 1870, Cos a Rica’s P esiden , Tomás Gua dia, con ac ed Mino Kei h
and his uncle, Hen y Meiggs, o build a na ional ail oad om he coun-
y’s main Ca ibbean po o i s capi al, San José. Wes Indian labo e s,
mos ly Jamaican, we e b ough in om he Ca ibbean o comple e he
back-b eaking wo k. These labo e s plan ed banana ees along he ails: a
way o b inging a bi o home wi h hem and o p o iding addi ional sus e-
nance. When Kei h an ou o money wi h only 60 miles o ail comple ed,
he also plan ed bananas, bu in he hopes o selling hem o p o i in New
O leans. The e was g owing demand o bananas in he Uni ed S a es, a
ma ke de eloped by he Bos on F ui Company selling Jamaican, Cuban,
and Dominican bananas in he US no heas . In 1899, indeb ed due o his
ail oad en u e and in need o a new dis ibu o , Kei h me ged his ope a-
ions wi h Bos on F ui and he Uni ed F ui Company (UFC) was bo n. A
i s peak, he UFC ope a ed in Colombia, Panama, Hondu as, Gua emala,
Cos a Rica, he Dominican Republic, Jamaica, and Nica agua, con olling
land ha equaled he size o Rhode Island and Connec icu . Wi hin hese
coun ies, he UFC banana zones ope a ed as au onomous encla es wi h
ex ao dina y poli ical, social, and economic powe .
Cen al Ame ican na ions, smalle and unable o secu e loans as easily
as hei Sou he n Cone coun e pa s, pa icula ly in he wake o he Ba ing
C isis, nego ia ed wi h o eign in es o s like he UFC. Coun ies conceded
ax b eaks, exemp ions om po du ies, and land concessions o secu e
ail oad and ag icul u al de elope s’ in e es . Mino Kei h, o example,
ecei ed 800,000 ac es o ax- ee land om Cos a Rica o de elop he
ail oad. In u n, companies p o ided i al in as uc u e ha coun ies
we e unable o p o ide o he wise. A inco po a ion, he UFC ope a ed jus
112 ailway miles. By 1930, i ope a ed o e 1,700 miles. In as uc u e
wen well beyond ails: in Gua emala he UFC began unning he coun-
y’s pos al se ice in 1901 and he T opical Radio & Teleg aph se ice
in 1913.
The company’s ise demons a es he Uni ed S a es’ inc easing eco-
nomic ole in La in Ame ica. By he s a o Wo ld Wa I he Uni ed S a es
had al eady in es ed $1.2 billion in o he egion. Collec i ely, Mexico
and Cen al Ame ica and he Ca ibbean accoun ed o 79 pe cen o hese
in es men s.2 Mos unds pou ed in o anspo a ion o ien ed owa d he
expo sec o , such as ail oads. Expo p io i ies o en dic a ed whe e new
ack lines would be laid, lea ing po ions o he popula ion wi h minimal
54 Expo -led G ow h (1870–1930): Pa II
o no access o anspo a ion de elopmen s. In 1877, Mexico coun ed jus
400 miles o ack in se ice ha linked Mexico Ci y o he Ca ibbean po
o Ve ac uz. When Po i io Díaz came o powe in 1876, his au oc a ic
uling b ough he s abili y ha US in es o s c a ed. By 1891, he Mexican
Na ional Railway was comple ed, linking Mexico Ci y di ec ly o Co pus
Ch is i, Texas almos in a s aigh line.
US capi al also played a deciding ole in de eloping po s and lu-
ial anspo . In he mids o Colombia’s Wa o a Thousand Days
(1899–1902), a ci il con lic be ween libe als and conse a i es ha le
70,000 dead and no clea ic o , he Uni ed S a es u ned i s a en ion o
Colombia’s no he nmos p o ince o Panama. The is hmus was discon-
nec ed om much o Colombia’s capi al bo h geog aphically and socially,
bu as he na owes poin in he hemisphe e i o e ed he bes chance o a
canal o link he A lan ic Ocean and Ca ibbean o he Paci ic Ocean. A e
Colombia’s Sena e ejec ed a ea y ha would ha e ceded con ol o he
Uni ed S a es o a Canal Zone o 99 yea s, he US h ew suppo behind
Panamanian ebels and p omp ly ecognized Panama’s independence.
Panama ceded con ol o he Canal Zone o he US go e nmen in 1903,
and a combina ion o ail oad, enginee ing, and a my leade s o e saw he
cons uc ion. They used wha hey could o he in as uc u e le behind
by a ailed F ench endea o o c ea e he canal, b inging in Spanish, Black
Wes Indians, and Black Ame icans o comple e cons uc ion. To build he
canal “ he No h Ame icans in es ed 352 million dolla s and ended wi h
a balance in human li es o 5,609 people [dead], o whom 4,500 we e
black wo ke s.”3 The e we e coun less o he s like Wil ed McDonald, a
widowe who, ha ing los bo h his legs in cons uc ion, had no means o
aise his wo child en.4
In es men s in he Ca ibbean ansla ed o conside able in e e ence
in na ional so e eign y and iscal policy in he in e es o p o ec ing US
businesses. The mos endu ing in e e ence came wi h he occupa ion o
Pue o Rico in he wake o he 1898 Spanish-Ame ican Wa . Pue o Rico
became “a e i o y … belonging o he Uni ed S a es, bu no a pa o
he Uni ed S a es.”5 While in 1952 i became a Commonweal h, i s ill
occupies a liminal s a us. Cuba gained independence du ing he wa , bu
US occupa ions in 1905–1909 and 1917–1921 also impeded so e eign y.
The si ua ion was no much di e en on adjacen Hispaniola. Nei he
Hai i no he Dominican Republic had gained poli ical s abili y enjoyed
by mos o mainland La in Ame ica. Be ween he 1840s and 1910, 21
o 22 Hai ian p esiden s we e assassina ed and be ween 1911 and 1915
alone, he e we e six p esiden ial changes. The Dominican Republic
was no be e , coun ing 30 e olu ions and 50 p esiden s om he
1840s o 1930s. Wi h such unce ain y used as jus i ica ion, he Uni ed
S a es occupied Hai i du ing 1915–1934 and he Dominican Republic
Expo -led G ow h (1870–1930): Pa II 55
du ing 1916–1924. As pa o he occupa ion, he US assumed con ol o
Hai i’s Na ional T easu y and Bank, using 40 pe cen o Hai i’s na ional
income o inance o eign deb (p edominan ly US and Ge man). In he
Dominican Republic, US occupa ion skewed he economy owa d luc a-
i e suga p oduc ion. A simila dynamic de eloped in Nica agua, whe e
loans o he coun y came wi h wo conside able concessions. Fi s , in
o de o ensu e ha cus oms du ies we e di ec ed owa d deb paymen s,
he Nica aguan cus oms collec o would be nomina ed by US banke s and
app o ed by he Uni ed S a es Sec e a y o S a e be o e being appoin ed
by Nica agua’s p esiden . Second, he Nica agua Na ional Bank was
c ea ed. Howe e , i was o be inco po a ed in he Uni ed S a es and a
majo i y o sha eholde s would be US banke s. This in e e ence was he
ule, no he excep ion: 10 ou o 20 La in Ame ican epublics had US
o icials in some o m o supe ising capaci y in cus oms o ices o make
su e ha deb s we e being se iced.6
Wi h a signi ican oo hold in he Ca ibbean, Cen al Ame ican, and
Mexican economies h ough bo h go e nmen in e en ion and p i a e
in es men , he Uni ed S a es accele a ed i s ole in La in Ame ica du -
ing and a e Wo ld Wa I. Wa - o n Eu ope, now mo e occupied wi h
ebuilding he con inen , was unable o in es o he same deg ee. This
c ea ed an en i onmen ha swi ched he poli ical and economic powe
dynamics. By 1929, US in es men in he egion had mo e han ipled,
making i he bigges lende . In he pos -wa e a US in e es s en u ed
u he sou h: Sou h Ame ica now accoun ed o 56 pe cen o US in es -
men s in he egion.
The UFC was an ou lie in he scale o i s en u e and in luence, bu i s
app oach o La in Ame ica’s expo ma ke con o ms o a gene al end
owa d g ea land accumula ion. Al eady s eeped in colonial p ac ices
o unequal land dis ibu ion, as indi iduals and companies bough and
secu ed land concessions, La in Ame ica ook u he s eps o becoming
he egion in he wo ld wi h he highes land inequali y. In Mexico, o
example, mid-nine een h-cen u y libe al e o ms opened lands o me ly
unde he Ca holic Chu ch’s domain and, along wi h ail oads, acili a ed
u he exp op ia ion o Indigenous lands. Es ablished landowne s added
o hei holdings by pu chasing and app op ia ing land. By 1910, hal o
Mexico’s land was con olled by jus 1 pe cen o he popula ion, lea ing
97 pe cen o Mexicans landless. In he sil e - ich Zaca ecas egion, eigh
haciendas ex ended o e 100,000 hec a es. Many landowne s we e no
o eigne s like he UFC, bu a he na ional eli es o indi iduals bene i ing
om pa onage ne wo ks ha ewa ded loyal y and social connec ions
a he han ap i ude. The e we e some ins ances o small and medium land
holde s gaining a oo hold, such as in cen al Mexico o he A gen ine
pampas, bu hese we e he excep ion. By he end o he pe iod, La in
56 Expo -led G ow h (1870–1930): Pa II
Ame ican land dis ibu ion was conside ably mo e unequal han bo h
de eloped and unde eloped pa s o he wo ld.
The scale o accumula ion would ha e been impossible wi hou ail oad
expansion. P io o ail oads, wi h ew na igable i e s in he egion, he
mos eliable me hod o anspo was ia mules o pack animals. Railways,
hus, b ough highe cos sa ings o La in Ame ica han hey did o he
Uni ed S a es by expanding p oduc ion o ag icul u al p oduc s in o new
on ie s and making anspo mo e eliable and cheape . Expo s lou -
ished, like co ee in B azil and Colombia, and ni a es and coppe in Chile,
bu he domes ic ma ke also expanded. Rail oads made new en u es pos-
sible, including ag icul u e o domes ic consump ion, se ices, and new
indus ies. These a e known as o wa d linkages. Backwa d linkages, how-
e e , we e slow o de elop when hey de eloped a all. New sec o s needed
o p oduce and c ea e he inpu s o ailways, such as ain ca cons uc ion
o s eel, a ely ma e ialized, o cing coun ies and companies o spend ail-
way e enues impo ing nails, ools, and equipmen . E en when domes ic
i on and s eel p oduc ion de eloped, as was he case in Mexico, i did no
cu down signi ican ly on impo ed dependence on o eign i on and s eel.
The UFC i sel p o i ed conside ably om o wa d linkages, becoming
he pinnacle o e ical in eg a ion. I expanded banana en e p ises in new
coun ies and acqui ed compe ing banana impo e s, g owing ho izon ally,
bu i also expanded in o cacao and suga p oduc ion. Those bananas i
did no p oduce i acqui ed om local g owe s, e ec i ely making he
UFC a monopsony, o he sole buye in mos coun ies. Acqui ing and
unding companies connec ed o suppo ing expo ing opical ag icul u e
p oduc ion, like shipping, ail oads, and communica ion, ypi ied i s e i-
cal expansion (see Figu e 4.1). The UFC ope a ed 24 adio s a ions (only
Figu e 4.1 Ve ical and ho izon al in eg a ion a he Uni ed F ui Company (UFC).
Expo -led G ow h (1870–1930): Pa II 57
i e o which we e company-speci ic) ha b oadcas beyond he banana
encla es and de eloped docks and lu ial anspo a ion wi h i s G ea
Whi e Flee , a comme cial and passenge shipping company.
Rail oad expansion also b ough enewed igo o cen u ies-old con-
lic s o e Indigenous lands, u he e oding p e-colonial communal land-
holding p ac ices ha had su i ed in some pa s o he egion. In 1854,
oughly 5,000 independen Indigenous communi ies exis ed in Mexico,
bu he 1883 Land Law jeopa dized hese g oups. I indi iduals o com-
munal land holde s could no p oduce a land i le, he land e e ed o
he go e nmen , whe e i could be gi en as a concession. Be ween 1880
and 1900, 134 million ac es e e ed o he s a e and by 1910, mo e han
95 pe cen o Mexico’s u al popula ion wo ked as hacienda labo e s. In
no he n Mexico, a e de ea ing he Yaqui Indians, Mexico ga e he Los
Angeles Richa dson Cons uc ion Company a land g an oughly a qua -
e he size o El Sal ado . The Yaquis we e jus one o many Indigenous
g oups whose cul u e and language encoun e ed signi ican challenges in
he ace o expo -o ien ed g ow h. Simila con lic s wi h he Bo acudo in
B azil and he Mapuche in Chile we e agg a a ed by ag icul u al expan-
sion. E en when he p ocess was mo e g adual, communal land p ac ices
had la gely e oded by he end o he expo -o ien ed pe iod in 1930.
Was he e an economic easoning o jus i y such inc edible accumu-
la ion? The economies o scale a gumen , o he idea ha only h ough
la ge-scale p oduc ion could a en u e be possible o p o i able, does no
explain land accumula ion in a eas whe e small and medium landholdings
we e also p o i able. Small-scale p oduc ion was cos -p ohibi i e only in
he case o suga , and a guably bananas. Wi h hese p oduc s, la ge en e -
p ises p e en ed p oduc s om spoiling, bu co ee, cacao, and whea ,
o example, could be jus as p o i able h ough small and medium land
holding.7 Fu he mo e, ou side o he Sou he n Cone and Cuba, while 70
pe cen o La in Ame ica’s economically ac i e popula ion was employed
in ag icul u e, only 20 pe cen o ag icul u al p oduc ion was de o ed o
expo p oduc s. Mos landowne s, and hus enan a me s and u al
labo e s, p oduced goods o he domes ic ma ke . A dualis ic ag icul u al
sys em de eloped. Fo he 20 pe cen o land de o ed o expo s, new
echnologies we e implemen ed, and e iciency, p o i abili y, and, a imes,
wages inc eased. Fo he non-expo ag icul u al sec o s, cos s and p e e -
ences saw ag icul u alis s ail o implemen new ag icul u al echnology,
o en elying on colonial echnologies and p ac ices ha impeded g ea e
e iciency.
Unde such accumula ion in a land-abundan space, La in Ame ican
wages la gely ailed o ise o he expec ed le els. The egion had an abun-
dance o land ela i e o i s popula ion: e en a e mass immig a ion, B azil
and A gen ina a e aged jus h ee people li ing in e e y squa e kilome e
58 Expo -led G ow h (1870–1930): Pa II
in 1913. E en he mos densely popula ed coun ies, El Sal ado and Hai i,
a e aged jus 70 people li ing pe squa e kilome e . Theo e ically, unde
hese condi ions, as labo demands g ew (as hey did du ing he pe iod o
expo -o ien ed g ow h), owne s could en ice enan a me s, campesinos,
daily ag icul u al, and daily labo e s wi h highe wages and be e con-
di ions. In ano he scena io, i owne s wan ed o keep labo cos s low,
hey could in es mo e in echnological and ag icul u al ad ances o limi
hei labo needs. In his scena io, displaced wo ke s would likely mo e o
u ban cen e s. An al e na i e me hod o keep wages low, howe e , was o
exploi local and mig a o y labo and o c ea e a i icial labo sho ages.
Un o una ely o La in Ame ica’s de elopmen , he labo exploi a-
ion o en ou weighed highe wages, be e condi ions, and echnologi-
cal ad ancemen . This endency aligned wi h colonial labo exploi a ion
and he pe sis ence o sla e y h ough 1888. E idence o inc easing ag i-
cul u al wages in expo -o ien ed egions, such as Sou heas e n B azil,
A gen ina’s Pampas, and sou he n Mexico lend some suppo o he p e-
dic ed highe wages. Mine wo ke s also ecei ed somewha highe wages,
bu o en had o buy o e p iced i ems a company s o es. Some immi-
g a ion s a egies e en en iced immig an s wi h land owne ship. The e
was also some imp o emen in implemen ing echnology. In he Sou he n
Cone, non-expo comme ce bene i ed om he echnological ad ance-
men s o he expo ma ke and u baniza ion and indus ial di e si ica ion
ensued. Some Mexican comme cial a me s also implemen ed new ech-
nologies o he domes ic ma ke , bu in es men s in ag icul u al echnol-
ogy emained low and gains in non-expo sec o s we e unde whelming.
Mos landowne s op ed o keep wage cos s low by elying mo e hea ily
on labo exploi a ion a he han echnological imp o emen s. Such was
he case o Mayan labo e s in sou he n Mexico’s henequen plan a ions,
B azil’s Amazon ubbe plan a ions, and a eas o Pe u, Boli ia, Colombia,
and Gua emala. This was also he case o many ag icul u al labo e s,
p oducing oods u o domes ic ma ke s.
P esumably, wi h mo e expo e enues gene a ed du ing his phase,
na ional go e nmen s could in es in social se ices o he b oad popula-
ion. By 1930, some gains had been made in e ms o heal h and educa ion.
The a e age li e expec ancy inc eased by h ee yea s be ween 1910 and
1930, illi e acy declined by 10 pe cen in he same pe iod, and nume acy
had eached almos 90 pe cen by he end o he pe iod. A e age schooling
also inc eased om less han a yea in 1870 o almos 2.3 yea s in 1930.
Bu , as schola s ha e ound his o be a pe iod o inc easing inequali y
wi hin he egion and wi hin indi idual coun ies, equal access o hose
gains was lagging. E en in Sou he n Cone coun ies, whe e GDP pe capi a
igu es g ew close o Eu opean and US igu es, in e nal inequali y g ew.
Wages declined ela i e o bo h land p ices and GDP pe capi a, meaning
Expo -led G ow h (1870–1930): Pa II 59
ha e en when land became mo e aluable and coun ies became weal h-
ie ela i e o o he coun ies, ha new weal h did no each he ypi-
cal wo ke . Resea ch on changes in a e age heigh s co obo a e a pe iod
o ha dship, as well as expanding na ional dispa i ies. When child en do
no ecei e adequa e nu i ion o su e om heal h challenges, hey o en
ha e below-a e age heigh s, an e ec known as s un ing. Reduced heigh s
hus a e o en a sign o unde de elopmen . In A gen ina, esiden s in he
Pampas egion, he cen e o A gen ina’s expo sec o , we e signi ican ly
alle han hei in e io coun e pa s. In B azil, no heas e ne s lagged
behind o he egions, pa icula ly he sou heas co ee-g owing egion. In
A gen ina, u ban p o essionals and s uden s g ew alle much as e han
unskilled labo e s. A simila e ec occu ed in Mexico and B azil whe e
middle-class passpo holde s g ew o a e age heigh , whe eas lowe -class
mili a y ec ui s ei he expe ienced a e e sal, o only gained minimally in
s a u e. Mo e esea ch in o o he coun ies’ heigh s and s anda ds o li ing
will likely yield simila ends.
The Mexican Re olu ion s ands as a cau iona y ale o he cos s such
inequi ies p esen . Unde Po í io Díaz’s p esidency and 34 yea s o ela i e
poli ical s abili y, ail oad and indus ial g ow h had also pushed many
Mexicans o he b ink. E en p io o Díaz’s ascendancy o he p esidency
in 1876, mos Mexicans expe ienced declining li ing s anda ds. By he
ea ly wen ie h cen u y, a g owing u ban middle class and p o essionals
we e i ed o undemoc a ic elec ions and Díaz’s cien í icos, hand-picked
echnoc a s, disp opo iona ely bene i ing om he coun y’s g owing
economy. The economic down u n in 1907 b ough ma e s o a head.
O e 100 s ikes occu ed be ween 1905 and 1910. S iking Cananea
Coppe Company mine s (1906) and Rio B anco ex ile wo ke s (1907),
discon en ed wi h company s o es and low wages, aced iolen ep ession
unde he Díaz egime. When Díaz once again an o he p esidency in
1910, he coun y e up ed. No he n wo ke s and sou he n ag icul u al
labo e s p o ided he bulk o he man- (and woman-) powe behind he
ci il con lic . While he es o he egion el he challenges o Wo ld Wa
I, Mexico endu ed sel -in lic ed iolence be ween 1913 and 1917. Ten pe -
cen o Mexico’s popula ion died in he Re olu ion.8 Many o eign skilled
wo ke s also le , esul ing in a dea h o echnical knowledge. While
indus ial impo s ebounded ela i ely quickly, ag icul u al p oduc ion
only e u ned o p e-Re olu ion le els be ween 1934 and 1940.
A semblance o peace a i ed wi h he 1917 Cons i u ion, bu in some
a eas, igh ing pe sis ed h ough he 1920s. Among o he e olu iona y
e o ms, he cons i u ion called o ag a ian e o m, a es uc u ing o he
exis ing land owne ship s uc u e ha would be edis ibu i e in na u e.
Mexico’s e o m maximized p i a e p ope y lo s a 100 hec a es and
eins i u ed communal land p ac ices h ough he ejido g an s.9 I would
60 Expo -led G ow h (1870–1930): Pa II
no be un il he Cá denas e a o he 1930s ha many o hese ag icul-
u al e o ms came o ui ion, bu he i s s eps had been aken wi h he
Cons i u ion and i se ed as a ha binge o he poli ical jockeying ha
would be equi ed in he s a e-led indus ializa ion pe iod ha ollowed.
Ag icul u al labo dissa is ac ion also moun ed wi hin he UFC banana
zones o Cen al Ame ica. The wo k o ce in hese zones included con-
ac ed skilled and unskilled wo ke s, c ea ing pa allel cul u al communi-
ies. Enginee s and execu i es enjoyed US-s yle houses and lawns while
labo e s c ea ed and elied on mu ual aid socie ies and chu ches o social
suppo s. Wo ld Wa I challenged he sys em: many commodi y p ices
ell, including banana p ices. Wo ldwide de la ion in 1920 and 1921 com-
pounded he p oblem wi h commodi y p ices alling e en u he . The
luc a i e banana indus y had done li le o educe s uc u al inequali ies
in he egion. When he UFC implemen ed cos -sa ing measu es, wo k-
e s o en su e ed. Facing de e io a ing condi ions, UFC wo ke s o med
unions in Hondu as and Gua emala in he 1920s. When Cuyamel F ui
banana wo ke s in Nica agua wen on s ike in 1925, hey aced hea y
ep ession.10 By 1926, wo ke s in San a Ma a, Colombia eached hei ip-
ping poin , o ming he Unionis Uni y o Wo ke s o Magdalena (USTM).
Wo ke s wen on s ike in 1928. In esponse, he Uni ed F ui Company
called on he Colombian go e nmen ’s a med o ces, which a es ed s ik-
e s, and on Decembe 5, “ he soldie s i ed in o massed c owds, killing
hund eds.”11 The s ike was e ec i ely ep essed, bu i emained an indel-
ible ma k in campaigns o change and e o m. Colombian Nobel P ize–
winning au ho Gab iel Ga cía Má quez e en ensh ined he s uggle, as
well as he impac o ail oads on a ic ional communi y, in his 1967 alle-
go ical mas e piece, One Hund ed Yea s o Soli ude.
Lima Gene al S ike, 1919 (Lima, Pe u)
In Pe u, legisla ion passed in 1918 es ic ed wo kdays o women and
child en o eigh hou s. The impac in ex iles was conside able as women
and child en comp ised a sizeable po ion o he sec o ’s labo o ce.
O e all p oduc ion ell up o 20 pe cen , and o amilies whose house-
holds elied on women’s and child en’s wages, he educ ion c ea ed a p e-
ca ious si ua ion. In p o es , wea e s wen on s ike in Decembe o 1918.
By Janua y 13, 1919, i became a gene al s ike wi h wo ke s in Lima and
in he nea by po o Callao s iking o a gene al eigh -hou wo kday.
The wea e s who s a ed he s ike did no e en ea n hou ly wages, being
paid a piece a e, so while hey ough o an eigh -hou wo kday, hey
also demanded an inc ease in piece a es o compensa e o he income los
by educed wo k hou s. S e edo es p o ided a physical incen i e no o be
s ikeb eake s and he ac ha u ban anspo was also on s ike made
i di icul o ind eplacemen wo ke s. Limeños a la ge we e impac ed:
Expo -led G ow h (1870–1930): Pa II 61
s iking bake s c ea ed a b ead sho age and he e was e en a un on ood-
s u s in an icipa ion o s o es closing and supply sho ages om s iking
dockwo ke s.12 A e jus wo days, P esiden Pa do ceded he eigh -hou
wo kday ha labo e s demanded. I onically, wo ke s ailed o gain wage
o piece a e inc eases, he o iginal demand o wea e s, demons a ing he
complex na u e o labo o ganiza ion.
Bo h he 1919 Lima Gene al S ike and Colombia’s 1928 Magdalena
S ike e lec La in Ame ican labo and wo king-class o ganiza ion du ing
his pe iod o expo -o ien ed g ow h. Ag icul u al labo e s we e o en
di ec ly connec ed o he expo sec o , bu indus ial wo ke s we e also
indi ec ly connec ed. As indus y g ew, so oo did labo o ganiza ion.
S ikes, howe e , concen a ed in wo pe iods, 1902–1908 and 1917–1921.
They we e also mo e common in u ban spaces, especially be ween 1900
and 1930, o which Pe u’s 1919 Gene al S ike s ands as jus one example.
O ganiza ion ended o be mo e success ul in ci ies, whe e a g owing mid-
dle class some imes suppo ed o ganiza ion and s ike s could e ec i ely
pa alyze domes ic indus ial p oduc ion and he domes ic economy.
Condi ions did no necessa ily imp o e in he 1920s, bu g owing labo
discon en in he pos -wa e a c ea ed an en i onmen whe e employe s ook
in o accoun labo condi ions and poli icians began inco po a ing wo king-
class conce ns in o poli ical pla o ms. Male wo ke s ep esen ed an expand-
ing o ing bloc. To unde s and wha mo i a ed labo e s in his momen
equi es unde s anding changing s anda ds o li ing. In u ban cen e s, his
means explo ing indus ial g ow h du ing he pe iod and examining how
labo e s and indus ialis s deal wi h b oade challenges. These included
global inancial c ises, demog aphic p essu es, wa ime sho ages, and pos -
wa compe i ion. Lima’s 1919 Gene al S ike se es as jus one example.
Rail oads and domes ic demand spa ked manu ac u e s o de elop. New
sec o s expanded in p oduc s adjacen o he expo ma ke o ail oads,
such as ju e sacks (B azil) o s eel mills (Mexico), bu hen expanded in o
o he inished p oduc s like ex iles, bee , and ciga e es. T anspo a ion
imp o emen s cu p oduc ion cos s, making La in Ame ican p oduc s
mo e compe i i e. Dep ecia ing exchange a es also encou aged domes-
ic indus y: impo s we e mo e expensi e, making cheape domes ic
al e na i es mo e a ac i e o consume s. As hese sec o s g ew, indus-
ialis s p essu ed go e nmen s o inc ease impo a i s on inished p od-
uc s ha compe ed wi h na ional p oduce s, like ex iles and be e ages.
Simul aneously, hey lobbied o keep a i s low on p oduc ion inpu s, cap-
i al and in e media e goods like machine y and bo les, needed o hose
inished goods. The esul was ad hoc ade p o ec ion: by he s a o
Wo ld Wa I, La in Ame ica’s a i a es we e he highes in he wo ld.13
These companies and ela ed en u es and se ices employed a g owing
numbe o people li ing in La in Ame ica. Many o he enginee s, highes
68 Expo -led G ow h (1870–1930): Pa II
Habe , S ephen H. “The Poli ical Economy.” In How La in Ame ica Fell Behind:
Essays on he Economic His o ies o B azil and Mexico, 1800–1914. S an o d:
S an o d Uni e si y P ess, 1997.
Ko zeniewicz, Robe o P. “Labo Un es in A gen ina, 1887–1907.” La in
Ame ican Resea ch Re iew 24, no. 3 (1989): 71–98.
LaRosa, Michael J., and Ge mán R. Mejía. Colombia: A Concise Con empo a y
His o y. Plymou h: Rowman & Li le ield, 2017.
Li e s, C. “How he Panama Canal Took a Huge Toll on he Con ac Wo ke s
Who Buil I .” Smi hsonian .co m, Ap il 18, 2018. Accessed July 2, 2022.
Linde , Pe e H. “The Unequal Lag in La in Ame ican Schooling Since 1900:
Follow he Money.” Re is a de His o ia Económica – Jou nal o Ibe ian and
La in Ame ican Economic His o y 28, no. 2 (2010): 375–405.
López-Alonso, Mo amay. Measu ing Up a His o y o Li ing S anda ds in Mexico,
1850–1950. S an o d: S an o d Uni e si y P ess, 2012. h ps://doi .o g /10 .1515
/9780804782852.
Luna, F ancisco Vidal, and He be S. Klein. The Economic and Social His o y o
B azil since 1889. Camb idge: Camb idge Uni e si y P ess, 2014.
Lu z, Casey Ma ina. F om he G ounds Up: Building an Expo Economy in
Sou he n Mexico. S an o d: S an o d Uni e si y P ess, 2019.
Mi elman, Vic o A. “The Semana T ágica o 1919 and he Jews in A gen ina.”
Jewish Social S udies 37, no. 1 (1975): 67–73.
Pandol e, F ank C. “The Role o he Uni ed S a es in Nica agua om 1912–1933.”
Fle che F. 9 (1985): 401.
Picca o, Pablo. Ci y o Suspec s: C ime in Mexico Ci y, 1900–1931. Du ham:
Duke Uni e si y P ess, 2001.
Ribei o, Ma ia Alice Rosa. Condições de abalho na indús ia êx il paulis a
(1870–1930). São Paulo: Huci ec, 1988.
Sal a o e, Rica do D., Ca los Agui e, and Gilbe M. Joseph, eds. C ime and
Punishmen in La in Ame ica: Law and Socie y Since La e Colonial Times.
Du ham: Duke Uni e si y P ess, 2001.
Schoono e , Thomas D. The Uni ed S a es in Cen al Ame ica, 1860–1911:
Episodes o Social Impe ialism and Impe ial Ri al y in he Wo ld Sys em.
Du ham: Duke Uni e si y P ess, 1991.
Solb ig, O o. “Economic G ow h and En i onmen al Change.” In The Camb idge
Economic His o y o La in Ame ica. Volume II. The Long Twen ie h Cen u y,
edi ed by Vic o Bulme -Thomas, John Coa swo h, and Robe o Co es-
Conde, 329–76. New Yo k: Camb idge Uni e si y P ess, 2006.
———. “S uc u e, Pe o mance and Policy in Ag icul u e.” In The Camb idge
Economic His o y o La in Ame ica. Volume II. The Long Twen ie h Cen u y,
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His o y in he Ame icas. Du ham: Duke Uni e si y P ess, 2003.
Wol e, Joel. “Ana chis Ideology, Wo ke P ac ice: The 1917 Gene al S ike and
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Re iew 71, no. 4 (1991): 809–46.
5
O e he cou se o he s a e-led g ow h pe iod, go e nmen o e sigh
and in ol emen in na ional economies inc eased subs an ially and La in
Ame ica emb aced inwa d-looking de elopmen s a egies. To a ce ain
deg ee, his ansi ion away om an expo -led g ow h pa h kep in line
wi h global endencies. P o ec ionis policies became mo e p ominen
in he pos –Wo ld Wa I e a. As he Uni ed S a es and Wes e n Eu ope
s uggled o eme ge om he G ea Dep ession in he 1930s, go e nmen s
emb aced Keynesian economics, in which go e nmen spending played a
c i ical ole in jumps a ing and egula ing he economy.
The ole o he s a e in he La in Ame ican model, howe e , con in-
ued o g ow subs an ially a e Wo ld Wa II as i a emp ed o con on
global and egional s uc u al inequi ies. This chap e aces ha p ocess,
om he ad hoc na u e o s a e-led g ow h du ing he G ea Dep ession o
he delibe a e ac ics in oduced by he Economic Commission o La in
Ame ica s a ing in he 1950s. Unable o app ecia e he behemo h ha
s a e-led g ow h could c ea e, coun ies o en doubled down on he s a e-
led model. By he end o he pe iod, his model also included deb -led
g ow h and a combina ion o s a e-owned en e p ises and mul ina ional
co po a ions ope a ing h oughou he egion. While he s a e-led model
had a ious i e a ions, mos encou aged egional in eg a ion, indus iali-
za ion, and ag icul u al di e si ica ion. Economic g ow h was consis en
du ing he pe iod o s a e-led g ow h, bu i was mos imp essi e be ween
1950 and 1980, g owing 2.7 pe cen pe capi a annually.
Despi e no able g ow h a es, he inwa d-looking app oach had ex eme
de iciencies. This chap e also explo es how and why in e nal s uc u al
inequali ies pe sis ed. The discussion o he Cuban Re olu ion demon-
s a es he scale o discon en among he b oad popula ion, and how
en angled economic and hemisphe ic poli ics became du ing he Cold Wa
e a. In he 1960s and ’70s, hose coun ies wi h access o su icien o eign
c edi adop ed a deb -led s uc u e. This app oach e u ned somewha o
commodi y expo s as a pa h o de elopmen , bu ading imbalances and
5
S a e-led G ow h (1930–1980)
This chap e has been made a ailable unde a CC-BY-NC-ND 4.0 licence.
DOI: 10.4324/9781003283843-5
10.4324/9781003283843-5
70 S a e-led G ow h (1930–1980)
iscal sho comings coupled wi h he ex e nal shocks o he 1970s oil c ises
led he way o hemisphe ic labo o ganiza ion e idenced by 1978 ABC
Me alwo ke ’s S ike in B azil.
Th oughou hese e en s, he hemes o u baniza ion, he u ban/ u al
dicho omy, and in o mali y eme ge as La in Ame ica shi ed om a u al
o u ban socie y. By he end o he 1930–1980 pe iod, La in Ame ica was
he mos u banized egion in he wo ld. While indus y was no es ic ed
o u ban a eas, i was a ac ed o he mo e ad anced in as uc u e and
abundan labo o ce ha ci ies o e ed. This chap e also unde sco es
he conside able p esence o au ho i a ian egimes, which implemen ed
sweeping s a e-led ini ia i es ha a guably g ew economies and inc eased
de elopmen , bu a he expense o democ a ic eedoms as hey used e -
o ac ics o e ain powe .
S ock Ma ke C ash, Oc obe 29, 1929 (New Yo k Ci y, Uni ed
S a es)
When he Uni ed S a es s ock ma ke c ashed in 1929 ushe ing in he
G ea Dep ession, he down u n e e be a ed globally. As he Uni ed
S a es and he Uni ed Kingdom we e key ading pa ne s and in es o s
in he egion, he c ash also sen shockwa es o La in Ame ica. The ipple
e ec in he egion, howe e , was less d ama ic han i was in he Uni ed
S a es. In 1935, he US economy was s ill eeling, wi h he na ional income
25 pe cen smalle han i had been in 1929.1 In con as , Colombia had
al eady eco e ed o p e-Dep ession p oduc ion le els by 1932, and B azil,
Mexico, A gen ina, El Sal ado , Gua emala, and Chile eached his mile-
s one in 1937. In ac , 16 o he egion’s 20 coun ies had eco e ed by he
end o he decade.2
Se e al easons explain he egion’s abili y o wea he his ex e nal
shock. Fi s , he p ices and olume o many o he p ima y p oduc s ha
La in Ame ica expo ed had al eady peaked and we e in decline in he
la e 1920s. This down u n was a ma ke o he mo e d ama ic u n in
he G ea Dep ession, bu in La in Ame ica i se ed o so en he blow.
Second, whe eas ailing banks and lending ins i u ions we e a hallma k
o he G ea Dep ession in he Uni ed S a es and he de eloped wo ld,
mos o La in Ame ica’s ecen ly e o med banks had subs an ial cu ency
ese es and wea he ed he s o my economy. This was pa icula ly ue o
he cen al banks ha had o med o we e solidi ied in he wake o Wo ld
Wa I. While hey su e ed unde declining expo p ices, hese banks had
in es ed in go e nmen bonds, ecei ing in e es paymen s ha kep hem
a loa un il expo p ices eco e ed. Na ional decisions o o go many o -
eign deb epaymen s in he wake o he global c isis c ea ed a la ge cush-
ion. Ul ima ely, La in Ame ican banks escaped wi h bumps and b uises,
S a e-led G ow h (1930–1980) 71
a oiding he aceplan ing o many inancial ins i u ions in he Uni ed
S a es and Wes e n Eu ope.
The so ened impac o he G ea Dep ession, howe e , did no p eclude
he c isis om ha ing d ama ic e ec s on he egion. On he con a y,
i accele a ed impo an s uc u al and economic ansi ions ha saw an
inc easing ole o he s a e in na ional economies be ween 1930 and 1980.
These changes included mo e di ec s a e in ol emen in economic s a e-
gies and g ea e p oduc and ag icul u al di e si ica ion. Smalle changes
also p o ed signi ican , such as an in oduc ion o income and land ax
sys ems in ligh o he educed impo du ies and expo e enues he
Dep ession b ough . This does no mean ha he expo -led model domi-
na ing om 1870 o 1930 was en i ely dismissed. On he e e o he G ea
Dep ession, in ac , in hal o he egion’s coun ies, one expo made up
o e 50 pe cen o expo s.3 Tha so o impo ance does no dissipa e
o e nigh , e en wi h a la ge shock like he G ea Dep ession. In 1939,
he indus ial sha e o he economy was s ill less han 20 pe cen in e e y
coun y, excep o A gen ina.4 So i should come as no su p ise ha in
mos coun ies, pa icula ly in mos smalle coun ies, expo s we e one
key ac o o La in Ame ica’s G ea Dep ession eco e y.
Go e nmen expendi u es, in es men , and local consump ion also
helped economies bounce back. As he expo sec o began o eco e ,
money lowed in, gi ing La in Ame icans pu chasing powe . As a esul ,
consume s demanded mo e goods and se ices. Bu in a global e a o
p o ec ionism a ising in he pos –Wo ld Wa I and Dep ession e a, he
impo ed p oduc s hey had g own accus omed o we e e en mo e expen-
si e. In many la ge and Sou he n Cone coun ies, go e nmen s p oac i ely
s o e o imp o e hei ade balance. This mean ha once economic con-
di ions s a ed o imp o e, hey ins i u ed a combina ion o a i s and
exchange a e policies ha bo h made na ional p oduc s mo e a ac i e
han impo s o consume s and made expo s cheape and mo e a ac i e
o o eigne s o buy. The collapse o he gold s anda d by 1933 p esen ed
ano he mechanism by which go e nmen s could impac ade: hey used
a combina ion o de aluing hei cu encies, using di e en exchange a es
o di e en sec o s, and aising impo a i s on ce ain goods o make
domes ically p oduced consume p oduc s mo e a ac i e o na ional
buye s.5
To unde s and he impo ance o exchange a es and hese ade poli-
cies, i is help ul o imagine you sel as a ou is isi ing ano he coun y.
In his coun y you go ou one day o buy some p esen s o amily mem-
be s back home. When you s a o calcula e he exchange a e, you ealize
ha he amoun you budge ed o p esen s allows you o buy many mo e
p esen s p oduced by local a isans han you had imagined and a a much
be e p ice han you could pay a home, so you end up buying mo e,
72 S a e-led G ow h (1930–1980)
maybe e en sa ing some o u u e p esen s. In his case, you ha e isi ed
a coun y whe e he exchange a e is weak compa ed o he cu ency you
ea n, which has inspi ed you o spend mo e money. The same decisions led
La in Ame ican consume s o buy La in Ame ican–p oduced p oduc s, as
go e nmen -in oduced exchange a es and a i policies made domes i-
cally p oduced i ems mo e a o dable.
The challenge in La in Ame ica was ha many in e media e and capi al
goods, like machines needed o make he inished goods people wan ed o
buy, s ill had o be impo ed. In o de o incen i ize p oduc ion a home,
go e nmen s c ea ed mul iple exchange a es in di e en economic sec o s.
The sec o s ha bene i ed he mos unde hese semi-a i icial condi ions
we e he indus ial manu ac u ing sec o s ha we e es ablished be o e
Wo ld Wa I. This p ocess, whe eby bu geoning indus ies a e p o ec ed
om o eign compe i ion by he go e nmen un il hey a e ma u e enough
o compe e, is o en e med impo subs i u ion indus ializa ion. Du ing
his pe iod o s a e-led g ow h, his s a egy a guably p o ed success ul in
he Sou he n Cone, in la ge coun ies, and, o a ce ain ex en , in mid-
sized coun ies. A gen ina, o example, opened o e 15,000 indus ial
i ms be ween 1935 and 1941 and he alue o indus ial goods p oduced
be ween 1935 and 1945 ipled.
Whe eas la ge , Sou he n Cone coun ies and Colombia ook a p oac-
i e app oach o manipula ing he exchange a es, mos smalle coun ies
in he Ca ibbean, and Cen al Ame ica, had a eac i e esponse. Cu encies
in hese coun ies also became de alued, bu i was a esul o ha ing
na ional cu encies pegged a a ixed exchange a io o he US dolla . This
choice a ose amids a long his o y o US in e en ion du ing he expo -led
g ow h pe iod ha le weakened poli ical and inancial sys ems. Fo hese
coun ies, de alua ion was de ac o, a he han di ec .
The impo a ion o inished goods om he Uni ed S a es accompanied
US in e en ion in cus oms houses du ing he expo -led pe iod, mean-
ing ha hese smalle coun ies lacked p e-wa indus ial in as uc u e.
In hese coun ies, mos na ional p oduc ion di e si ica ion occu ing in
he 1930s and ’40s was no so much impo subs i u ion indus ializa ion
as i was impo subs i u ion ag icul u e. Ins ead o impo ing s aple ood
and ag icul u al p oduc s, a me s shi ed o p oduce and sell hese p od-
uc s domes ically, ca e ing o inc easing domes ic demand. F om co on
o ex iles o ege able oil, co n, and beans, a me s in small coun ies,
jus like in la ge coun ies, di e si ied p oduc ion o adjus o a lack o
impo s and he inc easing popula ion. The coun ies wi h he leas lex-
ibili y o swi ch ag icul u al p oduc ion we e hose in Cen al Ame ica and
he Ca ibbean wi h subs an ial ac s o land con olled by mul ina ional
banana and suga companies, espec i ely (see he Uni ed F ui Company
in Chap e 4). Bu e en coun ies like Cuba, he Dominican Republic,
S a e-led G ow h (1930–1980) 73
El Sal ado , and Gua emala expe ienced some deg ee o di e si ica ion,
alongside Dep ession-e a go e nmen in e en ion and banking e o ms.
Impo subs i u ion indus ializa ion and ag icul u e did di e si y p o-
duc ion in La in Ame ica; howe e , i did li le o imp o e e iciency o
inc ease p oduc i i y, he amoun each wo ke p oduced. Keeping com-
pe i ion a bay disincen i ized implemen ing new echnologies and slowed
he de elopmen o p og ams o ain labo e s. Res ic ed access o c edi
and elec ic powe needed o sus ain ad ancemen s also kep p oduc i i y
low, pa icula ly in he indus ial sec o . In he Uni ed S a es he a e age
ac o y employed 43 wo ke s in 1939, bu La in Ame ica’s mos indus ial-
ized coun ies (A gen ina, B azil, Chile, Colombia, Mexico, and U uguay)
lagged conside ably.6 To add ess his low p oduc i i y wi hin a s a e-led
economic model equi ed e en mo e in e en ion. Populis poli ical lead-
e s, like Láza o Cá denas in Mexico, emb aced his app oach.
In 1938, Láza o Cá denas, he p esiden o Mexico, na ionalized he
oil indus y a e o eign e ine ies e used o acquiesce o a collec i e ba -
gaining ag eemen ha would ha e es ablished a 40-hou wo k week o
pe oleum wo ke s. In a display o populism ha combined adio ech-
nology and appeals o he g owing sha e o indus ial wo ke s, Cá denas
announced he ounding o Pe oleos Mexicanos (PEMEX), a na ional-
iza ion ha unila e ally ans e ed all p i a e p ope y o he esou ce
in o he hands o he s a e. His speech was ansmi ed li e be o e he e en
announced he change o his cabine membe s. Fo eign oil companies
wi h signi ican in es men s o Mexico’s Gul Coas , like Royal Du ch
Shell and S anda d Oil o New Je sey, we e caugh comple ely o gua d.
Ul ima ely, na ionalizing Mexican oil mi iga ed ene gy sho ages needed
o uel indus ial p oduc ion in Mexico, bu i did li le o incen i ize p o-
duc i i y and e iciency changes.
PEMEX ep esen s a pinnacle o di ec s a e in e en ion in he 1930s,
bu s a e in e en ion was nei he new no es ic ed o na ionaliza ions. In
he 1920s in he wake o Wo ld Wa I, some municipal, s a e, and ede al
go e nmen s ook o e oad cons uc ion and main enance, ail oads, and
ene gy p oduc ion. Some o he mos impac ul in e en ions du ing he
1930s in small and la ge coun ies alike we e go e nmen -d i en oad
expansions. A i s bes , hese oads s imula ed backwa d linkages o con-
c e e p oduc ion and o wa d linkages o complex bus sys ems se ing pas-
senge s and ca go anspo h ough he wen y- i s cen u y. A i s wo s ,
hese oads u he e oded wha emained o communal landholding and
semi-au onomous Indigenous g oups h oughou he egion and unda-
men ally al e ed ecosys ems.
The s a e-led g ow h model depended on popula suppo o go e n-
men in e en ion in o economic sec o s h oughou he mid- wen ie h
cen u y. S a e o e sigh came h ough de elopmen banks and ins i u ions
74 S a e-led G ow h (1930–1980)
o e ing suppo and c edi o new en u es. And go e nmen in e en-
ion o en included wo ke concessions in he o m o minimum wages,
pensions, and wo ke aining p og ams. Wo ke s, a leas male wo ke s,
we e o e s. Cá denas’s decision o announce PEMEX ia adio was so
popula ha women, who would no ge o o e in Mexico un il 1953,
began a mo emen o dona e jewel y and cash o help Cá denas indemni y
he expelled oil companies.7 In 1940s A gen ina, Juan Pe ón’s appeal o
u ban wo ke s ga ne ed him in ense loyal y las ing well in o he 1970s.8
Poli icians, howe e , had o oe a di icul line o suppo ing indus ial-
is s in bu geoning sec o s who con olled much o he capi al, while also
appealing o he popula classes, inc easingly u ban labo e s, whose o e
de e mined hei success in o ice. Pe haps he nicknames o B azil’s popu-
lis dic a o - u ned-p esiden , Ge úlio Va gas, bes sum up hese ensions.
Known as bo h he “ a he o he poo ” and he “mo he o he ich,” he
esul ing economic policies o en e lec ed he embedded con adic ions
and he challenges ha could esul om s a e-led g ow h.
One eason ha indus ial labo e s’ posi ions g ew mo e impo an
was he inc easing u baniza ion in La in Ame ica. Indus ial jobs we e
mo e o en a ailable in ci ies, which also concen a ed be e educa ional
esou ces, social se ices, and acili a ed wo ke o ganiza ion h ough
union ac i i ies and collec i es. Declining ag icul u al expo p ices in he
1930s also incen i ized ag icul u al labo e s o look elsewhe e o wo k.
Wi h immig a ion a a i ual hal in he 1930s, in e nal mig an s became
he newes addi ion o he u ban wo king class. Mos highe -paying o -
mal sec o jobs we e a ailable o men be ween he ages o 18 and 35,
bu women, al hough o en excluded om he indus ial wo k o ce o
es ic ed o ood and ex ile sec o s, also mig a ed o ci ies. They o en
ound wo k in he se ice sec o as domes ic wo ke s, selling p oduc s in
local ma ke s, o wo king in he in o mal ma ke . In 1930, jus 32 pe cen
o he egion’s popula ion li ed in u ban a eas, bu by 1950, 42 pe cen
li ed in ci ies. The ac ha La in Ame ica’s popula ion inc eased om 100
o 158 million in he same pe iod means ha o e 34 million new inhabi -
an s came o li e in hese u ban a eas, many o which had o e 20,000
inhabi an s (see Figu e 5.1). The ansi ion was no always di ec ly in o
he o mal labo ma ke : he sha e o in o mal u ban wo ke s was consis -
en h oughou he egion, ep esen ing be ween 10 and 20 pe cen o he
na ional wo king popula ion in 1950.9
Thus, on he e e o Wo ld Wa II, e en La in Ame ica’s mos indus ial-
ized economies we e in a semi-nascen s a e and acing conside able chal-
lenges. Indus ial p oduc ion had inc eased, bu many sec o s we e s ill
elian on impo ed inpu s needed o c ea e hose p oduc s. Fu he mo e,
p oduc ion was no longe gua an eed and depended on go e nmen
in e en ion. E en wi h an inc ease in jobs c ea ed by di ec and indi ec
S a e-led G ow h (1930–1980) 75
in e en ion, people s uggled o ind o mal employmen and he s abili y
i a o ded. Ci y in as uc u es we e easily o e whelmed by apid u bani-
za ion and inhabi an s inc easingly demanded no jus jobs, bu also social
se ices. Thei o ing powe and abili y o s all indus ial p oduc ion
h ough s ikes and labo o ganiza ions in luenced poli ics. In con as ,
esiden s in he coun yside, which was o e 50 pe cen o La in Ame ica’s
popula ion in 1950, s uggled o mobilize o be e wo king condi ions
amids exploi a i e labo egimes and la ge-scale a ming.
ECLA ounded, 1948 (San iago, Chile)
Like he G ea Dep ession, Wo ld Wa II se ed as an ex e nal shock
o he egion wi h a d ama ic impac on economic ajec o ies. B azil
was he only coun y o send oops ( igh ing o he Allies), bu he wa
es ic ed La in Ame ica’s main ading pa ne s’ abili y o impo many
commodi ies and aw ma e ials om he egion. In esponse, he Uni ed
S a es coo dina ed wi h La in Ame ican leade s o inc ease US impo a-
ion o La in Ame ican goods, which abso bed some o he shock om
he wa ime ade dis up ion. The olume o La in Ame ican expo s
emained low, bu he alue o expo s inc eased. Rising impo cos s and
in la ion, howe e , empe ed hese expo e enue gains. La in Ame icans
depended on impo ed capi al and inished goods om Wes e n Eu ope
and he Uni ed S a es, bu hese ma e ials jus ickled in, and when hey
a i ed he e was no only high demand (due o a lack o supply), bu
0
10
20
30
40
50
60
70
80
1950 1970
Figu e 5.1 Pe cen age o popula ion li ing in u ban a eas o 20,000 o mo e
inhabi an s: 1950 and 1970. ECLAC. Uni ed Na ions. CEPALSTAT.
“Da abase o Demog aphic Bulle in No. 75: La in Ame ica:
U baniza ion and U ban Popula ion T ends.”
76 S a e-led G ow h (1930–1980)
also mo e cu ency a ailable o buy p oduc s. As o eign money was
exchanged o local cu ency o buy local p oduc s due o sho ages,
e ail p ices in La in Ame ica o domes ic and o eign p oduc s inc eased
by o e 10 pe cen .
Waning impo s also educed e enues. The egion imposed high cus-
oms du ies in he 1930s o encou age La in Ame ican indus ial p oduc-
ion, bu he measu es did no diminish impo s. By he s a o he wa ,
hese cus oms du ies accoun ed o up o 50 pe cen o go e nmen income.
Di ec income axes we e s ill a e in La in Ame ican a he ime, and he
loss o cus oms du ies le go e nmen s wi h less o spend on a ange o
measu es, including social se ices. The d ama ic shocks he wa b ough
o he ade and economic sec o encou aged La in Ame ican leade s o
look inwa d o a solu ion, a s a egy ha a imes could challenge pos -
wa global economic endencies.
In he pos -wa e a, he newly es ablished Wo ld Bank and Uni ed
Na ion’s In e na ional Mone a y Fund (IMF) we e willing o y and con-
ol in la ion and o s abilize cu encies in hei ques o build back wa -
o n economies. They wan ed o s eng hen de eloping economies and
p e en ano he G ea Dep ession and Wo ld Wa II. A numbe o UN
membe na ions also adop ed he Gene al Ag eemen on Ta i s and T ade
(GATT), a mul ina ional ea y o educe quo as, subsidies, and a i s ha
emained ele an o global ade h ough 1995. The IMF, Wo ld Bank,
and GATT ea y we e signs o a gene al global end owa d e e sing he
p o ec ionism o he in e wa yea s.
La in Ame ican UN ep esen a i es belie ed ha hese e o s we e no
su icien o add ess he ola ile ma ke p ices he egion su e ed. Since
independence, ola ile p ices and ade imbalances had plagued he egion
and Wo ld Wa II had exace ba ed hese imbalances. La in Ame icans
ad oca ed o addi ional o e sigh om he UN, no ing ha commod-
i y expo s we e much mo e suscep ible o global p ice and p oduc ion
luc ua ions han inished goods. Essen ially, La in Ame ica con inued o
be highly ulne able o ola ili y any ime a majo global c isis eme ged,
and many o he egion’s economis s and leade s a gued ha unless he
global ade imbalances impac ing p oduc ion o p ima y goods like co -
ee, suga , and coppe we e explici ly add essed, he egion would con-
inue o s uggle economically.
Chile’s ep esen a i e o he Uni ed Na ions p oposed a new g oup o
add ess egion-speci ic challenges – he Economic Commission o La in
Ame ica, ECLA (CEPAL in Spanish and Po uguese and oday ECLAC
o include he Ca ibbean). Simila o he Ma shall Plan implemen ed o
ebuild Eu opean economies, La in Ame icans insis ed ha a egional
app oach was equi ed o ca ch up o de eloped coun ies. When he p o-
posal came o a o e in he Uni ed Na ions, despi e ese a ions om he
S a e-led G ow h (1930–1980) 77
Uni ed S a es, Canada, and he So ie Union, he ECLA passed, opening i s
doo s in San iago, Chile in June 1948.
Raúl P ebisch, an A gen ine economis , led he commission in name and
in p ac ice o decades. In 1949, P ebisch published a mani es o, one ha
was quickly ansla ed in o Po uguese. In he mani es o, he economis
in oduced he concep o co e and pe iphe y ha was he closes o an
ECLA ideology ha came o exis . Fo P ebisch he s ep-by-s ep de elop-
men espoused by W.W. Ros ow and many No h Ame ican and Eu opean
schola s ailed o acknowledge unequal ading dynamics be ween cen e
and pe iphe al na ions.10 Cen e na ions bough p ima y goods om
pe iphe al na ions while pe iphe al na ions la gely impo ed manu ac u ed
goods om cen e na ions. The ade imbalance lay in he ac ha p i-
ma y p oduc p ices declined mo e han manu ac u ed p ices, c ea ing a
s uc u al gap be ween coun y g oups. As long as La in Ame ica was p o-
ducing hese p ima y p oduc s, hey would always be behind. The ECLA
s uc u alis s, mo e commonly e e ed o as dependis as, we e con inced
ha c ea ing expo ma ke s o goods beyond commodi ies was essen-
ial o pe iphe al coun ies o make he ansi ion o become de eloped
coun ies. These ECLA s uc u alis s se ed as a coun e poin o econo-
mis s who la gely ollowed he Uni e si y o Chicago economic model ha
emphasized inancial managemen . Known as mone a is s, hey ad oca ed
o cu bing excessi e mone a y expansion and exchange a e mismanage-
men and mo ing owa d c edi s abili y. Fo mone a is s, low in la ion
and mone a y s abili y we e he keys o de elopmen .
In Chile, he ECLA ound a lou ishing in ellec ual en i onmen whe e
economis s, sociologis s, and o he social scien is s deba ed he nuances
o he inwa d-de elopmen app oach.11 Thei impac quickly sp ead well
beyond heo e ical deba es. O ices opened in Mexico Ci y and Rio de
Janei o in 1951, and poli icians and policy expe s, despe a e o appeal
o o e s who el he b un o economic ola ili y b ough on by Wo ld
Wa II, implemen ed ini ia i es o adhe e o ECLA di ec i es. Du ing he
pe iod o s a e-led g ow h, he ECLA had he g ea es di ec impac on he
economies o Chile and B azil.12
The G ea Dep ession and wa ime expe iences p o ided some insigh
in o possible s a egies o encou age his ansi ion owa d he ECLA
inwa d-looking model. Di ec in ol emen om he s a e, o example,
could jumps a indus ial p oduc ion. Du ing he 1930s and Wo ld Wa
II, La in Ame ican go e nmen s’ willingness o incen i ize non adable
p oduc ion, goods made in he coun y o domes ic consump ion, injec ed
li e in o indus ial sec o s and o na ional economies. Many o hese poli-
cies, howe e , had been implemen ed in an ad hoc manne . The ECLA
espoused a delibe a e app oach o s imula e p oduc ion. The app oach
included inc easing egional ading and lessening he dependence on US
84 S a e-led G ow h (1930–1980)
edis ibu ed, bene i ing jus 39 pe cen o campesinos. Land e o m
e o s in 1960s Chile and Pe u we e simila ly lacklus e , eaching less han
one- hi d o he campesino popula ion.24 In Cuba, he adicalized e olu-
ion did shi he balance. By 1970, Cuba’s poo es 20 pe cen con olled
almos 8 pe cen o weal h. The sha e ha he iches 20 pe cen con olled
d opped o 35 pe cen om he 60 pe cen i had con olled jus a decade
be o e. While he mid-sized a ms ha he ECLA had hoped o ailed o
ma e ialize unde Cas o’s ag a ian e o m, he es uc u ing did make a
den in pe sis en inequali y.
Cuba’s exp op ia ion o e ine ies and p oduc ion also buil on ea lie
ends. Na ionaliza ions we e ela i ely common du ing his pe iod, pa -
icula ly in sec o s ha conce ned na u al esou ces and in as uc u e.
When Cá denas c ea ed PEMEX in 1938, he ollowed a simila na ion-
aliza ion as Boli ia had enac ed in 1937. As ea ly as he 1920s, some
coun ies w ough con ol o ains and anspo a ion sys ems, which
had o en been owned by o eigne s o mul ina ional co po a ions. Cuba’s
Re olu ion, howe e , c ea ed a space whe e La in Ame ican calls o land
e o m and exp op ia ions could easily be con la ed wi h communism.
In an e o o p e en simila e olu ions, he Uni ed S a es ini ia ed
a hemisphe ic Alliance o P og ess in 1961. I s goal was o imp o e
La in Ame ica’s economy, and i s policies and ini ia i es o en emb aced
he ECLA s uc u alis s’ calls o de elopmen unding, c edi , and land
e o m. Billions o dolla s pou ed in o La in Ame ica. One o he chie
ecipien s o Alliance o P og ess unding was Chile.25 As such, when
o e s democ a ically elec ed he socialis Sal ado Allende as hei p esi-
den in 1970, Chile was seen as an Alliance o P og ess ailu e. Allende
expanded land e o m ini ia ed in he 1960s and exp op ia ed Chilean
coppe mines. In e u n, Chile was mischa ac e ized as ano he Cuba,
and he coun y aced an immedia e educ ion in in e na ional economic
aid and loans, u he complica ing a ocky economic eali y o in la ion,
sho ages, and ins abili y. The economic chaos c ea ed popula suppo
o a coup among many Chileans, including u ban middle-class women
who had suppo ed Allende’s candidacy in 1970. Consequen ly, he was
ous ed in a mili a y coup on Sep embe 11, 1973. Unde Gene al Augus o
Pinoche ’s subsequen dic a o ship (1973–1989), housands o Chileans
we e disappea ed o o u ed.26 Pinoche ’s an i-communis s ance encou -
aged in e na ional loans o e u n, despi e he pe sis en s a e e o ac ics
keeping him in powe h ough 1989.
Human igh s abuses abounded no only in Pinoche ’s Chile, bu in
egimes h oughou he egion du ing he s a e-led pe iod. In he Dominican
Republic, Ra ael T ujillo’s ul a-na ionalis ic dic a o ship (1939–1961)
e o ized esiden s, pa icula ly Hai ian descendan s. T ujillo expanded
he s a e bu eauc acy and public employees, e en ac i ely cou ing ho el
S a e-led G ow h (1930–1980) 85
employees, ba be s, and domes ic wo ks o in o m on dissiden s. He wen
so a as o o e combs and chai s, and e en opened a ba be shop in he
small ci y o Neyba in exchange o in elligence ga he ing.27 Mili a y dic-
a o ships in he Sou he n Cone in he 1960s and ’70s imposed censo ship
and e o and s eng hened p opaganda o keep dissen a bay. E en in
Cas o’s Cuba, dissen e s o communism o hose seen as a h ea we e
sen o labo camps, whe e hey oiled on suga plan a ions unde inhu-
mane condi ions.
Au ho i a ian egimes could mo e easily implemen signi ican e o ms,
and GDP pe capi a and p oduc i i y g ew subs an ially be ween 1945
and 1973. Those ha emb aced an i-communism ecei ed in e na ional
aid and loans, acili a ing s a e p ojec s, om dams and highways o
schools and medical cen e s. By he 1960s, many e en u ned away om
a pu ely indus ialized g ow h plan and espoused di e si ying expo
ag icul u e by in oducing new expo commodi ies like soy and opical
ui s. This pe iod is o en e med he “golden age” o La in Ame ican
economic g ow h. G ow h and p oduc i i y imp o ed egionally, bu he
la ge economies a ed he bes . B azil and Mexico expe ienced annual
GDP pe capi a g ow h a es o 4.1 pe cen and 3.4 pe cen , espec i ely,
equaling and su passing a es in indus ialized Eu ope (3.5 pe cen ) and
he Uni ed S a es (2.2 pe cen ) du ing he same ime pe iod.28 In e ms o
g ow h, which was inc easingly a combina ion o s a e-led and deb -led
g ow h, La in Ame ica was s a ing o ca ch up o he de eloped wo ld.
The inc eased en y o women in o he labo ma ke explains some o his
g ow h, bu no all: he e we e clea e iciency gains du ing his s a e-led
pe iod. De elopmen indica o s, like educa ion a es and mo ali y, also
imp o ed.
A he s a o he s a e-led pe iod in 1930, no e en hal o La in
Ame ican adul s we e li e a e. In he subsequen 50 yea s, educa ion
expanded subs an ially. In he 1950s, “impo an gains in access o edu-
ca ion a all le els esul ed om his con e gence o social, poli ical, and
economic o ces.”29 Educa ion p og ams in Pe u, o example, a ge ed
adul campesinos and he discussion and p o ision o bilingual educa ion
su aced in coun ies wi h la ge Indigenous popula ions. Cas o’s Li e acy
Campaign in 1961 mobilized Cuba’s li e a e popula ion o educa e he
coun y’s illi e a e adul popula ion.30 The success was ema kable, as
boys and gi ls as young as 12 yea s old wen in o neighbo hoods and u al
a eas, e ec i ely hal ing Cuba’s illi e acy a e, making i he lowes in
La in Ame ica and close o a es in he Uni ed S a es and Wes e n Eu ope.
Mig a ion owa d ci ies also helped o imp o e li e acy and schooling a es
as educa ional esou ces we e easie o access. Educa ion con inued o be
a p io i y ac oss he egion as mo e au ho i a ian go e nmen s came o
powe in he 1960s and ’70s. Cu icula, howe e , shi ed away om opics
86 S a e-led G ow h (1930–1980)
o ci izenship and democ acy and owa d skills-based ma e ials. And a he
uni e si y le el, p o esso s, depa men s, and s uden s c i ical o au ho i-
a ian egimes became a ge s o s a e iolence o we e o ced o become
exiles. Ne e heless, by 1980, eigh o en adul s could ead, an o e 30
pe cen imp o emen om he s a o he s a e-led pe iod.31 These de el-
opmen gains, as well as he con inued economic g ow h, pa ially explain
he pe sis ence o au ho i a ian egimes in he egion.
Despi e subs an ial li e acy gains be ween 1930 and 1980, La in
Ame ica as a egion emained behind Wes e n Eu ope and he Uni ed
S a es. Gua emala, Hondu as, Nica agua, and Hai i s ill had li e acy a es
below 70 pe cen . Only A gen ina, U uguay, Cos a Rica, and Cuba had
a es abo e 90 pe cen . Li e acy also did no necessa ily equa e o ade-
qua e schooling. In es men s in uni e si y-le el educa ion disp opo ion-
a ely bene i ed p i ileged g oups, and in 1960 he bulk o La in Ame ica’s
wo king popula ion s ill had no o mal schooling. By 1980 his was s ill
he case in Gua emala and Hai i, bu he maximum educa ion ha mos
La in Ame icans could hope o was s ill abysmal: one o h ee yea s in
Colombia, Hondu as, Panama, Pa aguay, and Pe u, and ou o six yea s
in A gen ina, B azil, Cos a Rica, Cuba, Ecuado , U uguay, and Venezuela.
Only in Chile was he e subs an ially mo e schooling, wi h one- hi d o
he economically ac i e popula ion comple ing he equi alen o some
high school.32 By compa ison, 80 pe cen o US wo ke s had comple ed a
high school educa ion in 1981.33 These educa ional de iciencies kep La in
Ame ica unde de eloped: as long as only a hand ul o La in Ame icans
we e ecei ing he highes aining, wage di e en ials be ween skilled and
unskilled wo ke s would emain high, con inuing he adi ion o pe sis-
en income inequali y.
One challenge o p o iding adequa e educa ion was a g owing school-
age popula ion. Ou side o he Sou he n Cone, he egion’s popula ion
g ew 2.7 pe cen annually be ween 1950 and 1980 as mo ali y and li e
expec ancy a es imp o ed. In 1930, he ypical La in Ame ican could
expec o li e un il he age o 34. By 1950, li e expec ancy had isen o o e
50 in many coun ies and was as high as 66 in U uguay. By 1980, egional
li e expec ancy had nea ly doubled, eaching 64 yea s o age, and se -
e al coun ies enjoyed li e expec ancies o e 70. E en in coun ies whe e
he 1980 li e expec ancies had no ye eached 60, hey had imp o ed by
10–15 yea s be ween 1950 and 1980.34 As e ili y a es emained high
du ing he pe iod, only s a ing o decline no iceably in he 1970s, a demo-
g aphic bulge o child en eme ged. Thus, child ea ing and esponsibili ies
con inued o keep many women ou o he o mal labo ma ke du ing
he s a e-led pe iod. I was only in he 1970s ha women o p ime child-
bea ing age (20–35) became mo e ac i ely in ol ed in he o mal labo
o ce, and hei employmen was o en in he se ice sec o . This sec o
S a e-led G ow h (1930–1980) 87
did no bene i om expo p o ec ions o s a e-led ini ia i es, meaning
women’s en y in o he labo o ce did li le o add ess egional gende
inequali ies.35 In coun ies whe e e ili y a es exceeded i e child en pe
woman, emale pa icipa ion in he o mal labo ma ke emained low.
This does no mean, howe e , ha women did no wo k. In u ban a eas,
o example, hey could o en ind in o mal o piece- a e wo k o supple-
men household income. The one excep ion was Hai i, whe e ag icul u e
emained he main sec o o employmen . He e, despi e e ili y a es o
5.4 and li e expec ancy o jus 53 yea s, wo- hi ds o women wo ked,
wi h mos wo king in ag icul u e.36
Concu en wi h popula ion g ow h was he inc edible u baniza ion
a e. By 1950, La in Ame ica’s u ban sha e had g own o 42 pe cen . The
u baniza ion a e hen ose 4.4 pe cen annually be ween 1950 and 1970,
a a e unp eceden ed wo ldwide. By 1980, 65 pe cen o he egion’s pop-
ula ion li ed in ci ies, and La in Ame ica was he mos u banized egion
o he wo ld. The non-ag icul u al sha e o he wo k o ce shi ed acco d-
ingly. Whe eas in 1950, one- hi d o he wo king-age popula ion was s ill
employed in adi ional ag icul u e, by 1980, ha sha e had d opped o
jus 19 pe cen . Only in Cen al Ame ica and Hai i did mos o he popu-
la ion emain ou side o ci ies. As many educa ional and s anda ds-o -
li ing gains came om he mo e o u ban a eas, de elopmen indica o s
in hese coun ies lagged behind he egion as a whole. Unde au ho i-
a ian go e nmen s, some in as uc u e, elecommunica ions, and public
u ili ies in emo e u al a eas helped o alle ia e u ban/ u al dispa i ies
du ing he pe iod o s a e-led g ow h. The legacy o hese ini ia i es, how-
e e , has been pa icula ly c i icized by en i onmen alis s and Indigenous
igh s ad oca es, as hese measu es o en expanded expo ag icul u e
and u he impinged on emaining Indigenous cul u al p ac ices and
land igh s.
U baniza ion ans e ed unde employmen om he u al o u ban
en i onmen . In ci ies, he accompanying challenges and po e y we e
mo e di icul o igno e. In o mal housing and comme ce we e iable solu-
ions o u ban and pe iphe al dwelle s. Since he libe al e o ms o he
mid-nine een h cen u y, go e nmen s had a emp ed o egula e he hous-
ing and comme cial ac i i ies. Regula ions spanned om housing o s ee
ending and peddling codes, bu an inabili y o keep pace wi h u baniza-
ion and o e ec i ely shi cul u al p ac ices o o con ol en ep eneu ial
endea o s mean ha unau ho ized housing cons uc ion, ending, and
anspo a ion pe sis ed, leading o inc eased in o mali y. By 1980, as
much as 20 pe cen o La in Ame ica’s wo k o ce was employed in he
u ban in o mal ma ke s, and in Mexico he sha e eached 44 pe cen .
F om bohíos in Cuba o a elas in B azil and poblaciónes callampas in
Chile, in o mal pe iphe al housing mush oomed in he u ban pe iphe ies.
88 S a e-led G ow h (1930–1980)
Despi e imp o ed li e acy and li e expec ancy achie ed be ween 1950
and 1970, discon en wi h he s a us quo and challenges o unequal de el-
opmen emained. A quick su ey o La in Ame ican a is ic and eligious
ends du ing he s a e-led pe iod demons a es how daily economic chal-
lenges and eali ies in luenced cul u al p oduc ion. A is s in Cuba’s nue a
o a, he egion’s nue a canción, and B azil’s música popula b asilei a
(MPB) o en a icula ed discon en wi h poli ical and socio-economic
injus ice. Vic o Ja a’s 1969 song “Ques ions o Pue o Mon ” se es as
a p ime example. As he c i iques he go e nmen ’s deadly in asion o he
shan y own, he eulogizes he ic im: “He died wi hou knowing why / hey
iddled his ches / igh ing o he igh / o ha e a loo o his own.” New
La in Ame ican Cinema like B azil’s Cinema No o and A gen ina’s Thi d
Cinema also highligh ed s a k eali ies.37 Wi hin he Ca holic Chu ch, a
ac ion o p ies s led a g owing social mo emen o libe a ion heology
ha ac i ely p omo ed social jus ice and he e adica ion o mise y. E en in
coun ies whe e au ho i a ian and an i-communis poli ical egimes ook
poli ical con ol in he la e s a e-led g ow h pe iod, many a is s and
chu ch o icials con inued o c i ique he s a us quo, albei wi h eiled ly -
ics and he h ea o being disappea ed.
ABC S ike, 1978 (São Paulo, B azil)
In 1978, me alwo ke s in he me opoli an egion o São Paulo, B azil
wen on s ike. Much indus ial p oduc ion occu ed jus sou h o he ci y
p ope in h ee con iguous ci ies: San o And é, São Be na do do Campo
and São Cae ano do Sul. Gi en he le e s o he ci ies’ names, he mo e-
men became known as he ABC s ike. The alue o wo ke s’ wages had
d opped by as much as 20 pe cen and hey we e willing o mobilize du ing
B azil’s mili a y dic a o ship. The eal wage decline was he culmina ion o
economic policies aimed a s abilizing B azil’s economy in he mids o a
agile global ma ke , and one wi h d as ic implica ions o B azil’s popu-
la classes. The me alwo ke s’ s ike hal ed p oduc ion in Sou h Ame ica’s
mos indus ialized me opoli an a ea. Led by Luiz Inácio Lula da Sil a,
known mo e commonly as Lula, he me alwo ke s’ s ike ushe ed in a
pe iod o inc easing mobiliza ion in he coun y.38 Cou s ound he s ikes
illegal and Lula himsel ended up imp isoned o a mon h, bu discon en
did no disappea . O e one million wo ke s, om school eache s o hos-
pi al wo ke s, pa icipa ed in mo e han 100 s ikes in 1979 alone.
The discon en was echoed h oughou he egion, as wo ke mobili-
za ion inc eased in he la e 1970s. As he s a e-led g ow h model ans-
o med, i inc easingly became a deb -led g ow h model, making he egion
mo e suscep ible o la ge global luc ua ions and ex e nal ma ke shocks.
Coupled wi h g owing in la iona y endencies o he s a e-led model, he
daily challenges o he s a us quo p o ed oo much by 1978. In mid- and
S a e-led G ow h (1930–1980) 89
la ge-sized coun ies, many au ho i a ian egimes we e challenged, and in
Cen al Ame ica, u ban and u al discon en inally coalesced in o de in-
able mo emen s.
How did his change ake place? I you walk down a US g oce y s o e
p oduce aisle in Decembe , you will disco e a clue. Chances a e you will
ind no sho age o ui , and i you end up buying g apes o kiwis, he e is
a high p obabili y ha you ui was g own and ha es ed in Chile. I you
head o he e ige a ed aisle and pick up some o ange juice, he e’s a good
chance ha a leas some o he o anges we e g own in B azil. This expan-
sion o expo ag icul u e beyond adi ional commodi y expo s like co -
ee and suga expanded du ing he s a e-led pe iod o g ow h in he 1960s
and 1970s. Despi e ex ao dina y e o s in he egion o expo manu ac-
u ed goods globally, he eali y was ha commodi y expo s emained he
co e o La in Ame ica’s expo s. This was ue in coun ies o all sizes, so
La in Ame ica, a land- and na u al esou ce– ich egion, e isi ed he ole
hese sec o s could and should play in de elopmen .
In he ag icul u al ealm, echnology was impo an in ha modi ied
seeds, pes icides, upda ed machine y, and expanded i iga ion sys ems, all
pa o he g een e olu ion, allowed o inc eased yields and expanded
p oduc ion. The s a e suppo ed di e si ying ag icul u al expo s wi h
de elopmen banks, ag icul u al esea ch ins i u es, and in as uc u e
p ojec s such as dams and oads ha opened new lands o p oduc ion.
Expansion, howe e , did no e ec i ely add ess he mini undio/la i un-
dio dicho omy. La ge a ms ha could p oduce a scale wi h mode n
machine y did no o e inc eased employmen oppo uni ies and small
a me s and campesinos o en mo ed ei he in o u al pe iphe ies o o
ci ies. Ne e heless, Chile became a ui , ege able, and wine expo e ;
A gen ina expo ed lemons and expanded whea p oduc ion using high-
yield whea ; Pa aguay began plan ing co on and soy; and B azil began
expo ing soy and o anges. B azil also ocused on imp o ing suga p oduc-
ion, an a emp hey hoped would s imula e he coun y’s no heas e n
economy, which lagged behind he sou heas conside ably.
B azil e en connec ed suga o ene gy p oduc ion. Since Wo ld Wa
I, scien is s and ag icul u alis s had expe imen ed wi h using suga cane
bagasse o p oduce e hanol. In he 1970s, wi h subs an ial s a e in es -
men , hey c ea ed a iable e hanol ene gy sec o and spu ed o wa d
linkages, such as he design o lex uel engines ha could un on bo h
gas and e hanol. The in e es in commodi y ene gy p oduc ion was no
es ic ed o B azil. A e all, ene gy was one o he key inpu s o indus ial
p oduc ion no only in La in Ame ica bu also globally. Among he oil- ich
coun ies o Mexico, Venezuela, and Ecuado , Mexico had al eady na ion-
alized oil in 1938, bu Venezuela and Ecuado ollowed sui in 1975 and
1976, espec i ely. Boli ia in es ed hea ily in na u al gas, na ionalizing
90 S a e-led G ow h (1930–1980)
p oduc ion in 1969, and ac oss he egion s a e in es men in dam con-
s uc ion ha nessed he powe o La in Ame ica’s i e s o hyd oelec ic
powe . The I aipu Dam, on he bo de o Pa aguay and B azil, was a bila -
e al endea o ha became known as one o he eigh enginee ing wonde s
o he wo ld.
Expanding ag icul u al and indus ial p oduc ion and expo s was also
dependen upon ou side unding. Luckily o La in Ame ican poli icians
and echnoc a s, hese expansions occu ed alongside no only an inc ease
in commodi y p ices, bu also a global inc ease in di ec o eign in es -
men . Ex e nal banks like Ci ico p, San ande , and Banco Bilbao began
seeking new bo owe s a ound 1966, an e o ha inc eased by 1970.
La in Ame icans we e looking o capi al o und his new le el o s a e-led
g ow h and he g owing numbe o SOEs. Ea lie en u es o en depended
on cen al banks and in e na ional lending o ganiza ions like he IMF o
he In e -Ame ican De elopmen Bank (IADB), bu domes ic in es men
was limi ed and he IMF and IADB loans came wi h s ipula ions se by
mone a is s. La ge- and mid-sized coun ies hea ily capi alized on he e a
o di ec o eign in es men : bank lending was jus 10 pe cen o ex e nal
deb in 1966 bu had al eady jumped up o 26 pe cen in 1972. Be ween
1965 and 1980, La in Ame ica ecei ed an ex ao dina y 70 pe cen o
o eign di ec in es men o he de eloping wo ld.
The e we e se e al impo an ea u es o hese loans ha help o explain
he c isis ha sen wo ke s o he picke line by he end o he 1970s. Fi s ,
hese p i a e bank loans sp ead he isk among many g oups in he hopes
o dec easing he chance o de aul s. As up o 60 pe cen o loans could
be designa ed o “gene al pu pose” a he han a speci ic use, banks did
no necessa ily know whe e he money was being in es ed.39 Much wen
o SOEs ha migh no be p o i able o he wise. The o he key ea u e o
he loans ha made hem a ac i e o lende s was ha hey had lexible
in e es a es, meaning ha hei in e es a es would inc ease o dec ease
depending on he lending na ion’s economy. Fo mos o he 1970s, in e -
es a es emained low while commodi y p ices we e high, a boon o La in
Ame ica’s mid- and la ge-sized economies.
Below he su ace, his combina ion o s a e- and deb -led g ow h ha
cha ac e ized he 1970s le La in Ame ica in a p eca ious posi ion. I com-
modi y p ices ell (some hing ha his o ically was bound o happen) and
in e es a es inc eased, he egion would ace signi ican iscal challenges.
This indeed is wha happened in 1978, when he second global oil c i-
sis sen he economies o hose o eign lending ins i u ions in o a eces-
sion, leading hem o aise in e es a es.40 The lus e o economic g ow h
quickly anished and he in la ion ha had been es e ing expanded. In
u banized coun ies and hose wi h an expo mining sec o , wo ke mo e-
men s p o ed des abilizing. In Cen al Ame ica, Nica agua, El Sal ado ,
S a e-led G ow h (1930–1980) 91
and Gua emala, u ban wo ke s and campesinos o med coali ions, ad o-
ca ing o adical social, poli ical, and economic change. The esul ing io-
lence be ween ac ions plunged much o Cen al Ame ica in o a ho bed
o iolence and bloodshed in he subsequen decade. This uphea al no
only decima ed u al and Indigenous popula ions, bu i also incen i ized
mig a ion and c ippled economies.
In Nica agua, he Somoza egime had been in powe since US ma ines
had le he coun y in 1936. Unde he egime one single amily con olled
he p esidency o mo e han 40 yea s. Mo e p oblema ic was ha same
amily con olled 60 pe cen o he na ion’s economy. In he 1960s, uni-
e si y s uden s, labo unions, and peasan collec i es s a ed o o ganize
agains he Somozas, naming hei mo emen a e a 1930s e olu iona y,
Césa Augus o Sandino. In 1979, he Sandinis a Re olu ion ook he ci y
o Managua, calling o land e o m, unioniza ion, and a mixed economic
sys em ha would combine some ma ke -d i en cha ac e is ics and o he
socialis elemen s. Inspi ed by Cuba, Sandinis as mobilized eenage s in
a Li e acy Campaign ha educed he coun y’s illi e acy o jus 12 pe -
cen . Fo he Uni ed S a es, he Sandinis a Re olu ion was seen as ano he
Cold Wa ailu e. In El Sal ado , a simila s uggle eme ged, bu he e, he
igh -wing mili a y held he uppe hand. In neighbo ing Gua emala, land
e o ms had been e oked ollowing a mili a y coup in 1954, and s a e
iolence pe sis ed, wi h Indigenous communi ies disp opo iona ely su -
e ing. While mid-sized a ms in Cos a Rica and a h i ing banking sec o
in Panama kep hese coun ies ela i ely s able, he de e io a ion o he
s a e-led app oach in he 1960s and ’70s, coupled wi h inc easing p es-
su e o mig a e om ag icul u al a eas, mo ed many Cen al Ame icans
owa d e olu iona y ba les.
Elsewhe e, in la ion p o ed des abilizing. As o eign di ec in es men
and in la ion ose wo ldwide in he 1970s, so did in la ion in he egion.
Fo he mos pa , La in Ame ica’s in la ion a es kep wi h wo ld a e -
ages, bu in he Sou he n Cone and B azil, in la ion eached iple digi s.
The s uc u alis s and many ECLA adhe en s had once seen in la ion as
a ool o incen i ize indus ializa ion and, hus, de elopmen . The mo e
ad anced La in Ame ican economies had educed expo e enues by
encou aging domes ic consump ion, bu a he same ime con inued o
impo in e media e and inished goods om ab oad. This c ea ed a ade
imbalance: La in Ame ican coun ies needed mo e o eign cu ency o buy
he p oduc s hey wan ed, while o eign demand o La in Ame ican cu -
encies declined ( hey we e no expo ing as much). Bu exchange a es,
e en when he e we e mul iple exchange a es, we e ixed, meaning ha
cu encies became o e alued, pa icula ly in he Sou he n Cone and
B azil. The esul ing in la ion became inc edibly des abilizing by he end
o he decade.
92 S a e-led G ow h (1930–1980)
In his en i onmen , cu encies we e de alued, u he inc easing incen-
i es o expo . The de alua ion, howe e , led o a dec ease in eal wages
and a subs an ial cos -o -li ing inc ease o he wo king class. Whe e
he e we e la ge, indus ial wo k o ces, such as he Sou he n Cone and
B azil, labo p essu e incen i ized go e nmen s o again aise expo axes.
The cycle epea ed, wi h in la ion and expec a ions o in la ion inc eas-
ing simul aneously. Al hough p essu e was much s onge in u ban cen -
e s, wo ke s connec ed o any expo sec o el hese impac s. Wi es o
Boli ian mine s, o example, began mobilizing in sea ch o be e condi-
ions in he 1960s. Facing c i icism om male pa ia chy and h ea s o
depo a ion and a es , he Housewi es Commi ee o Siglo XX’s hunge
s ikes success ully mo ed he go e nmen o p o ide concessions o min-
e s and hei amilies.41
To add ess he escala ing in la ion issue, coun ies implemen ed c awl-
ing pegs. The hope was ha a se ies o smalle de alua ions would be able
o s abilize cu encies while p e en ing he shock o a massi e de alua ion.
São Paulo’s me alwo ke s el o he wise. The ABC me alwo ke s’ s ike,
hen, can be unde s ood as e lec i e o a culmina ion o wo ke and popu-
la -class g ie ances du ing he e a o inwa d-looking and s a e-led g ow h.
The economic g ow h ailed o implemen su icien s uc u al change o
add ess weal h concen a ion and socie al inequi ies in La in Ame ica. By
he end o he 1970s he model also le coun ies wi h billions o dolla s
in o eign loans and c ippling in e es paymen s.
No es
1 Tho p in La in Ame ica in he 1930s, p. 8.
2 Hondu as, Nica agua, Cuba, and U uguay came o eco e du ing o a e
Wo ld Wa II.
3 See Bulme -Thomas, Economic His o y o La in Ame ica, 3 d edi ion, pp. 210–
11 o an o e iew o p oduc s.
4 Bulme -Thomas, Economic His o y o La in Ame ica, 3 d edi ion, p. 243.
5 P io o 1929, many la ge and Sou he n Cone coun ies saw he w i ing on he
wall ha he gold s anda d would go by he wayside. By 1931, G ea B i ain le
and by 1933, he Uni ed S a es.
6 US igu e om he Uni ed S a es Bu eau o he Census. His o ical s a is ics
o he Uni ed S a es, 1789–1945: A supplemen o he S a is ical abs ac o
he Uni ed S a es, Volume 789, no. 945. US Go e nmen P in ing O ice, 1949,
chap e J. A ailable h ps://www2 .census .go /lib a y /publica ions /1949 /com-
pendia /his _s a s _1789 -1945 /his _s a s _1789 -1945 -chJ .pd . Accessed Janua y
22, 2024. La in Ame ica s a is ics om Bulme -Thomas, Economic His o y o
La in Ame ica, 3 d edi ion, p. 243. Colombia a ed he bes wi h 32 wo ke s
pe es ablishmen , wi h Chile (25), B azil (20), Mexico (20), A gen ina (13), and
U uguay (7) ailing behind.
7 See Julie a Sanguino, “La exp opiación pe ole a de México, el hi o que ma có
el Gobie no de Láza o Cá denas,” El País, Ma ch 18, 2023. h ps://elpais .com /
S a e-led G ow h (1930–1980) 93
mexico /2023 -03 -18 /la -exp opiacion -pe ole a -de -mexico -el -hi o -que -ma co -el
-gobie no -de -laza o -ca denas .h ml.
8 Pe ón’s ea ly appeal also depended conside ably on he popula appeal o his
i s wi e, E a Pe ón, mo e a ec iona ely known as E i a.
9 Bé ola and Ocampo, Economic De elopmen , p. 192.
10 Ros ow summa izes mode niza ion heo y in “The S ages o Economic G ow h.”
11 Neo-Ma xis s, like And és Gunde F ank, ad oca ed ha unde de elopmen
was a coun e pa o de elopmen in capi alis , Fi s Wo ld, coun ies.
12 Celso Fu ado was a p ominen ECLA economis who espoused a mo e com-
plex app oach o s uc u al change. His ideas impac ed he en i e egion, bu
pa icula ly in his na i e coun y, B azil.
13 Cuba, o example, p oduced only eigh ilms be ween 1941 and 1945 and
Chile jus a ew mo e.
14 This inc ease in mili a y p oduc ion coincided wi h B azil’s mili a y dic a o -
ship om 1964–1985.
15 Galeano, Open Veins o La in Ame ica, p. 263.
16 The book was ansla ed in o mul iple languages, selling o e one million cop-
ies since i was i s published in 1971. La y Roh e , “Au ho Changes his Mind
on ’70s Mani es o.” New Yo k Times, May 23, 2014.
17 Cuba had he ou h highes GDP pe capi a in La in Ame ica in 1920 bu
lagged a e p o ec ionis measu es we e imposed. Bé ola and Ocampo,
Economic De elopmen , p. 16.
18 The comp omise saw So ie s ag ee o keep nuclea missiles ou o Cuba and he
Uni ed S a es ag ee o emo e nuclea missiles om Tu key.
19 Fidel Cas o se ed as Cuba’s p ime minis e h ough 1976 and as Cuba’s p esi-
den om 1976–2008.
20 Cas illo Bueno, Reyi a, p. 119.
21 Bulme -Thomas, Economic His o y, 3 d edi ion, p. 336.
22 Addi ional inspi a ion came om Eas Asian coun ies ha had implemen ed
land e o m and seemed o be ou pe o ming La in Ame ica.
23 To help unde s and he scale, Cá denas’s land e o m was he equi alen o a US
p esiden app op ia ing he equi alen o all he a mland in 1940 Cali o nia
and Vi ginia. Uni ed S a es Depa men o Ag icul u e. Na ional Ag icul u al
S a is ics Se ice, 1940 Ag icul u al Census, h ps://agcensus .lib a y .co nell .edu
/census _yea /1940 -census/.
24 Bé ola and Ocampo, Economic De elopmen , p. 196.
25 Holden and Zolo , La in Ame ica and he Uni ed S a es, chap e 4.
26 Allende himsel was a Ma xis bu was elec ed on a mul i-pa y icke . Pinoche
was no ous ed, bu a he o ed ou in a plebisci e and became a sena o o
li e.
27 Acos a Ma os, Eliades, ed. La Dic adu a de T ujillo: Documen os (1950–1961
Tomo III), Volume 5. San o Domingo: A chi o Gene al de la Nación, Edi o a
Búho, 2012, pp. 178–80. h p://www .la inam e ic ans udies .o g /book /dic adu a
_de _ ujillo _ 5 .pd .
28 Bé ola and Ocampo, Economic De elopmen , pp. 175–76; able is ci ing
Maddison, The Wo ld Economy.
29 Reime s, “Educa ion and Social P og ess,” p. 440.
30 A he s a o he Li e acy Campaign, Cuba’s adul illi e acy a e was oughly
25 pe cen .
31 As o ga, Be gés, and Fi zge ald, “S anda d o Li ing,” p. 790.
32 ECLAC, Anuá io Es adís ico, able 32–34. Fo Chileans, 33.3 pe cen o he
economically ac i e popula ion had be ween 10 and 12 yea s o schooling.
100 The Ma ke Re u n (1980–2008)
mo e secu e in es men oppo uni y. As Mexican in es o s sough ou US
dolla s as a mo e eliable cu ency, his capi al ligh made he alue o he
Mexican peso decline. In 1982, he si ua ion culmina ed in Mexico de alu-
ing i s peso, which los 60 pe cen o i s pu chasing powe . This se o a
downwa d spi al o u he dolla ligh ollowed by u he de alua ions,
plunging Mexico in o a ecession and making imely deb paymen s o i s
c edi o s simply impossible.
The impac o he inancial c isis and de aul expanded well beyond
Mexico as o eign banks seemed o suddenly become wa y o he en i e
egion’s abili y o mee in e es paymen s on deb s issued in he 1970s.
The ac ha many cu encies we e o e alued b ough he ea ha “any-
whe e” could become he nex Mexico. Each coun y had a unique se o
expo s and mac oeconomic policies, bu in gene al coun ies had high
ex e nal deb obliga ions ela i e o domes ic p oduc ion. This high deb -
o-GDP a io pu La in Ame ican go e nmen s a isk o de aul ing on
loan and in e es paymen s. Exace ba ing he ising in e es a es was he
ac ha oil’s low p ice was no anomalous: mos global commodi y p ices
ell. La in Ame ican na ions had somewha di e si ied p oduc ion du ing
he s a e-led pe iod, bu expo commodi ies emained impo an compo-
nen s o GDP. While low expo p ices con inued, and ising in e es a es
ensu ed ha deb paymen s would inc ease, he deb - o-GDP a io con-
inue o ise.
In he immedia e a e ma h o he peso c isis, he p e ailing opinion was
ha he down u n was empo a y, and ha he egion needed mo e access
o unds o wea he he down u n. Bo h coun ies and lende s looked o
eschedule deb as a solu ion. O e one-qua e o loans o La in Ame ica
had a iable in e es a es, so he hope was ha dec easing he amoun paid
and ex ending he paymen pe iod would ee up enough capi al so ha he
coun ies could make paymen s and would also open a low o new loans
o he egion. Unde s anding escheduling on an indi idual le el is help-
ul in concep ualizing he s uc u e. Imagine ha ing a la ge s uden loan
paymen ha you a e suddenly unable o pay because o some hing like a
change in you job o ano he majo li e ci cums ance. You can ei he s op
making paymen s, o you can each ou o he loan company o see i you
can dec ease you mon hly paymen s. The la e will equi e a change in
he e ms o he loan ha will ex end he leng h o ime (mon hs) you will
be making paymen s and migh equi e accep ing a di e en in e es a e,
bu i will p ese e you abili y o bo ow money in he u u e. When you
ci cums ances imp o e, you could once again inc ease you paymen s, i
you choose. Fo he lende , es uc u ing inc eases he likelihood o being
paid a all, e en i he wai o be paid ex ends. Bu lende s o La in Ame ica
we e wa y o he egion, so c edi o s added deb escheduling s ipula ions
ha equi ed coun ies o implemen mac oeconomic discipline and policy
The Ma ke Re u n (1980–2008) 101
e o m ha included cu ing go e nmen spending and inc easing o eign
cu ency ese es.
La in Ame icans, eage o e u n o no malcy and o con inue g owing
he economy, accep ed he unequal e ms, hinking ha he down u n was
empo a y. Bu i was no empo a y. Global commodi y p ices emained
low and new c edi ailed o e u n o he egion, plunging La in Ame ica
e en u he in o du ess. Go e nmen s ied o imp o e he balance o
ade, bu unde he new deb s ipula ions and in he absence o new loans,
hea y go e nmen spending was no an op ion. Thus, hey e u ned o
es ic ing impo s and incen i izing expo s h ough lowe expo axes.
The s a egy back i ed: lowe expo axes b ough in e en less e enue
and impo es ic ions se iously cons ained egional ade, u he c ip-
pling na ional budge s.
In Sep embe 1985, he In e na ional Mone a y Fund (IMF) p oposed a
mo e in en ional app oach, ecognizing he unlikelihood o a quick eco -
e y. The plan, known as he Bake Plan, would begin o a ion money
and loans o coun ies. I p e en ed La in Ame ican coun ies om aising
he deb ceiling, equi ing hem o balance na ional budge s and imple-
men aus e i y measu es o ecei e he despe a ely needed IMF money.
Ul ima ely, he es uc u ing ma ked he end o he s a e-led pe iod o
g ow h and a mo e owa d a ma ke -based app oach. The Uni ed S a es,
as a leading s akeholde in mone a y lending o La in Ame ica, held a sig-
ni ican ole in he plan. App o al o he Bake Plan, and he 1989 B ady
Plan ha ollowed, was con ingen on he app o al no jus o he IMF,
he Wo ld Bank, and g oups o in e na ional banke s, bu also o bo h he
Uni ed S a es T easu y and Fede al Rese e.
The mul i ude o ade and inancial e o ms in oduced o e he cou se
o he 1980s in o La in Ame ican economies would e en ually become
known as he Washing on Consensus. I included measu es ha would lib-
e alize ade and es ic a i s ha had inched up o e he s a e-led pe iod,
allowing o compe i ion. I also included inancial e o ms ha wo ked
owa d s abili y h ough co ec exchange a es and balancing budge s,
and equi ed p i a izing and auc ioning o many o he s a e-owned en e -
p ises. I goes wi hou saying ha an i-communism was also a p e equisi e
o lending and es uc u ing, meaning ha Nica agua unde he con ol o
he Sandinis as and emb oiled in ci il wa , was unable o enego ia e deb
paymen s. The deg ee o implemen a ion a ied, bu mos coun ies ook
signi ican s ides owa d a ma ke app oach. E en Cuba, decidedly no
pa o he Washing on Consensus e o ms, had o ee alua e i s economy
a e he all o he So ie Union. The island na ion ansi ioned o ely-
ing mo e hea ily on o eign ou ism and implemen ed a ou is economy
wi h di e en p ice s uc u es o ope a e alongside a na ional economy.
Some imes hese e o ms a e c i iqued as o igina ing ou side o La in
102 The Ma ke Re u n (1980–2008)
Ame ica, bu La in Ame ican s a es we e also hea ily in ol ed in he p o-
cess, despe a ely wan ing o educe he sha e o na ional budge s going
owa d in e es paymen s, which eached 2–4 pe cen by 1982.
Res uc u ing did no see an immedia e e u n o capi al in o he egion
and he 1980s ep esen ed a se e e se back o La in Ame ica. Commodi y
expo p ices con inued o decline, so coun ies con inued o s uggle wi h
a high deb - o-GDP a io. In e e y economic indica o he egion s uggled.
Globally, La in Ame ica’s sha e o wo ldwide p oduc ion also ell. Deb
paymen s as a sha e o GPD peaked in 1985 and 1986, bu by 1990 s ill
ep esen ed 10 pe cen o na ional budge s.2 GDP pe capi a ell by as much
as 8 pe cen as in la ion ose. In la ion eached iple digi s in A gen ina,
Boli ia, B azil, Nica agua, and Pe u. Ra es ose as high as 8,000 pe cen in
Boli ia in 1985 and 33,000 pe cen in Nica agua in 1988. Hype in la ion
o he 1980s had he abili y o change consume spending habi s: a he
han sa e o a ainy day, i was mo e aluable o spend in he momen .
Only Panama and Colombia we e spa ed he wo s . Much o Colombia’s
ela i e s abili y was bols e ed by an in lux o dolla s connec ed o illegal
d ug a icking ha did no e lec on he balance o paymen s, and in
Panama, he lone coun y wi h a dolla economy, o sho e banking, which
also included money launde ing, p o ided he coun y wi h much-needed
o eign ese es.
The e o ms also came wi h addi ional social pains. The new deb
ag eemen s limi ed go e nmen s’ abili y o spend on social p og ams like
schools, hospi als, and in as uc u e. As na ional cu encies we e de alued
(o en mul iple imes), people’s sa ings e apo a ed o e nigh . In he wake
o his, con idence in domes ic banks and sa ings e oded: many people
p e e ed o sa e away dolla s unde a ma ess o he nex c isis, a he
han isk pu ing na ional cu encies in a bank o lose alue. Fo he wo k-
ing class, a de alued cu ency mean wages shi ed downwa d, e oding
minimum wage inc eases ea ned in he 1970s. The dec ease in eal wages
anged be ween 20 and 40 pe cen , and many in he u ban wo king class
s a ed po e y in he ace wi h li le ecou se (see Figu e 6.1). Regionally,
mode a e and ex eme po e y had dec eased conside ably in he 1970s,
bu he 1980s saw an abou - ace wi h a 54 pe cen inc ease in mode a e
po e y and a 37 pe cen inc ease in ex eme po e y. Wi hin such u bu-
len challenges and unding cu s o sa e y main enance and police pa ols,
iolence in he egion inc eased.
Faced wi h such di e p ospec s, many u ban esiden s u ned o in o -
mali y. Du ing he 1980s, La in Ame ica’s in o mal employmen a e
mo e han doubled, ep esen ing 42 pe cen o he wo k o ce in 1990.
In o mali y was cos ly o bo h wo ke s and go e nmen s. Fo wo k-
e s, in o mali y a ely p o ided he sa e y ne o pensions, wo ke com-
pensa ion, collec i e ba gaining, and aca ion ime ha o mal sec o
The Ma ke Re u n (1980–2008) 103
jobs o e ed. Fo go e nmen s, he in o mal sec o la gely did no pay
axes, ende ing absen a la ge po ion o po en ial go e nmen e enue.
Compounding he inc easing in o mali y was he my iad go e nmen
egula ions and bu eauc a ic s eps needed o s a a legi ima e business.
While he Washing on Consensus may ha e add essed mac oeconomic
policies, i did no call o disman ling he pains aking bu eauc a ic p o-
cesses needed o c ea e o mal housing, anspo a ion, o businesses. Fo
example, o legally open a small s o e in Lima in he 1980s equi ed 43
days o bu eauc a ic pape wo k and paying o e 15 imes he mon hly
li ing wage.3 Facing such ba ie s, in o mal businesses o en p o ed mo e
a ac i e o en ep eneu s, despi e he ac ha hey would ne e be able
o acc ue pension plans o e ed by o mal employmen .
I should come as no su p ise ha ano he common eac ion o he
di e economic si ua ion o his pe iod was mig a ion. Ea ly on, alongside
in es men s, many middle-class La in Ame icans le o Eu ope and he
Uni ed S a es, and in B azil and Pe u, Japanese descendan s mo ed o
Japan. They ook wi h hem no only hei skills and expe ience, bu also
hei money. Fo many Mexicans, he Uni ed S a es se ed as a beacon. The
p oximi y o he US bo de , combined wi h es ablished Mexican-Ame ican
Figu e 6.1 Facing economic challenges and poli ical ep ession in he 1980s,
women in “La Vic o ia,” an in o mal se lemen in San iago, Chile,
used he collec i e olla común, he common po , o con on hunge .
“Olla Común” La Vic o ia. By Paulo Slache sky, CC BY-SA 4.0,
Wikimedia Commons.
104 The Ma ke Re u n (1980–2008)
communi ies h oughou he coun y, pa icula ly along he bo de , in
mos majo US ci ies, and in much o he Sou hwes and Texas, se ed as
an addi ional d aw.4 In 1980, oughly 2.2 million Mexicans we e li ing
in he Uni ed S a es, and i is es ima ed ha hal we e undocumen ed.5 By
1990, Mexican immig an a es almos doubled, eaching close o 4.3 mil-
lion. Undocumen ed a es also con inued o swell.6 The sha e o Ca ibbean
and Cen al Ame ican mig a ions o he Uni ed S a es also inc eased du -
ing his pe iod. Economic oppo uni y was he p ime mo i a o , bu many
Cen al Ame icans and Hai ians sough e uge om he poli ical iolence
a aging hei coun ies.7
The Uni ed S a es was no he sole des ina ion o mig an s. Simila
co ido s de eloped o o he coun ies wi h be e pe o ming economies.
Caugh up in a pa amili a y-na co wa , many u al Colombians mo ed o
Venezuela and Ecuado . Facing e hnic disc imina ion and ew p ospec s,
Boli ians joined compa io s who had mo ed o B azil in he p eceding
decade. In Cuba, ollowing a se e e economic down u n and a d ama ic
si ua ion whe eby 10,000 Cubans ook e uge in he Pe u ian embassy,
Cas o o ganized he Ma iel boa li o allow Cubans wan ing o lea e
he island eedom o emig a e i somebody was willing o pick hem up.
Be ween Ap il and Oc obe o 1980, oughly 100,000 Cubans (and 25,000
Hai ians capi alizing on he ag eemen ) a i ed in he Uni ed S a es.
Economic ins abili y did no jus impac mig a ion; i also dis up ed
he exis ing poli ics. The economic down u n p o ed des abilizing enough
o help opple o a leas se e ely a nish he exis ing poli ical s uc u es,
many o which we e igh -wing mili a y egimes. I ma ked he end o
he Du alie egimes in Hai i, which had included sec e e o squads
and inc edible s a e iolence. By he middle o he 1980s, he A gen ine,
B azilian, and U uguayan dic a o ships had ended. Those in Chile and
Pa aguay had allen by he end o he decade. The global ecession and
domes ic ha dships in he Uni ed S a es also b ough inc eased sc u iny o
US mili a y and economic aid being sen o wha we e e ec i ely Cold Wa
ini ia i es in Cen al Ame ica. Al hough ne e ully esol ed, ci il con-
lic s in El Sal ado , Nica agua, and Gua emala pe e ed ou as he 1990s
dawned.
The 1980s was no a loss o e e yone in he egion. Fo some con-
nec ed and well-posi ioned indi iduals, he decade p o ided an oppo -
uni y o buy he auc ioned-o s a e-owned en e p ises a an inc edibly
discoun ed a e. SOEs (see Chap e 5) came unde pa icula sc u iny
because mos ope a ed ine icien ly and equi ed con inual na ional and
in e na ional loans. Employing ens o housands o wo ke s, SOEs we e
cos ly, especially i hose wo ke s we e ine icien . The iscal conse a-
ism o he Washing on Consensus equi ed p i a izing many SOEs. F om
indus ial i ms and public se ice companies o elecommunica ions, he e
The Ma ke Re u n (1980–2008) 105
was no e en a clea coun o how many SOEs exis ed by 1985. In B azil,
o example, he go e nmen claimed 175 SOEs exis ed, bu one es ima e
pu he numbe much highe : 200 na ional, 339 s a e, and 32 municipal
SOEs. Be ween 1985 and 1992 o e 2,000 SOEs we e p i a ized in La in
Ame ica.8 Go e nmen s o en main ained some o m o sha eholding in
hese companies, bu no as he majo i y in es o con olling o e 50 pe -
cen o he company.
As s a e-owned companies we e o en sold o a a discoun ed a e, hey
became an alizing oppo uni ies o in es o s. Those en u es ha paid
o c ea ed a highly eli e business class. Ca los Slim o e s a case in poin .
In 1990, he Mexican go e nmen ag eed o auc ion o he s a e phone
company, TELMEX. Ca los Slim, an es ablished businessman, bough he
company o jus 20 pe cen o i s es ima ed alue. I was he culmina ion
o a numbe o simila in es men s he made du ing he 1980s p i a iza-
ions, and i was one ha would make him one o he wo ld’s iches
men in he wen y- i s cen u y. This was he embodimen o he Bake
Plan’s goals: elimina e excess spending, s imula e in es men wi hin La in
Ame ica, and make p o i able en e p ises ha would e en ually se e o
p o ide jobs and s abilize he economy.
Did his ma ke -d i en app oach p o ide he jobs and s abili y ha i
p omised? The ini ial aus e i y measu es o he 1980s had ex eme con-
sequences o some o he mos ma ginalized indi iduals, bu he 1990s
b ough some imp o emen s. Somewha aided by u he deb es uc u -
ing unde he 1989 B ady Plan, bu mos ly by a e u n o in es men in
he egion, go e nmen s could begin o econs uc con idence in hei
economic policies and inancial sys ems. Reco e y was slow going, and
i would no be o ano he qua e o a cen u y ha he egion would
each p e-1980 measu es. The mo e mode a e pace, howe e , was pe haps
a ma ke o educed ola ili y, some hing ha had pe pe ually eluded he
egion.
No h Ame ican F ee T ade Ag eemen , 1994 (Mexico, Uni ed
S a es, Canada)
I was Decembe 31, 1993, when he s a e capi al o Chiapas, Mexico, San
C is óbal de las Casas, was aken o e wi hou bloodshed. The Zapa is as,
a g oup o le is -o ganized Mayan communi ies who we e a med, issued a
decla a ion o wa agains Mexico, u ging Mexicans o o e h ow he ed-
e al go e nmen and he a my. They imed he akeo e o shock in e na-
ional audiences as i coincided wi h hemisphe ic celeb a ion o he No h
Ame ican F ee T ade Ag eemen (NAFTA).9 Signed as an ag eemen
be ween Canada, Mexico, and he Uni ed S a es, NAFTA was p omo ed as
ha ing he abili y o s imula e ade be ween he h ee coun ies by wo k-
ing owa d he ee low o elec onics, indus ial equipmen , ca s, luxu y
106 The Ma ke Re u n (1980–2008)
goods, and p oduce ac oss he h ee coun ies’ bo de s. The app oach was
o elimina e a i s and quo as piecemeal and o elimina e ade ba ie s
by 2008. NAFTA was designed o c ea e an in e na ional ma ke able o
compe e wi h China and he Eu opean Union. Such ade was alued a
US $6.5 illion and encompassed he li es o 370 million people. The
Mexican go e nmen had ini ia ed he con e sa ion o expand an exis ing
US-Canadian ag eemen o include hei sou he n neighbo and celeb a ed
he ag eemen as an oppo uni y o he Mexican economy and wages o
g ow, some hing despe a ely needed coming ou o he 1980s. Bo h he
Uni ed S a es and Mexico also hoped ha imp o ing Mexico’s economic
si ua ion would incen i ize Mexicans o emain in he coun y a he han
mig a e no h.
The Zapa is as saw NAFTA as a con inua ion o he ma ke -o ien ed
e o ms laying siege o he cul u al basis o hei Indigenous iden i y.
Building on he Washing on Consensus, Mexican P esiden Ca los Salinas
de Go a i issued an execu i e o de in 1992 ha allowed o Indigenous
communal lands o be pa i ioned and p i a ized. Fo he o e h ee mil-
lion households li ing on 28,000 u al ejidos, communal lands, he o de
came as a shock. This included many o he Zapa is as, who, ins ead o
u ning o mig a ion o idly wa ching, ook up a ms and in oked he name
o Mexico e olu iona y Emiliano Zapa a in an ac o esis ance.
NAFTA aced signi ican pushback in Mexico amongs he Zapa is as,
bu i was a om he only ee o libe alized ade ag eemen in he
egion. By he mid-1980s, when i became clea ha he economic down-
u n was no empo a y, he egion u ned away om he ECLA s uc u -
alis model owa d a ma ke -d i en s a egy ha looked o educe ade
ba ie s such as quo as and a i s. By 2000, all La in Ame ican coun ies
had joined he Wo ld T ade O ganiza ion (WTO), he successo o he
Gene al Ag eemen on Ta i s and T ade (GATT) es ablished a e Wo ld
Wa II.10 Coun ies also joined smalle ag eemen s wo king owa d open
egionalism and he ee mo emen o goods, se ices, and ac o s o p o-
duc ion. P e e en ial ade ag eemen s, which we e nego ia ed be ween
wo (o a ew) independen coun ies, we e common. Chile led he way in
his s yle o ag eemen , being pa o 25 ade ag eemen s co e ing 64 ma -
ke s spanning om Colombia and Canada o Tu key, Thailand, Malaysia,
and beyond by 2018.
T ade blocs, whe e mul iple coun ies joined a ade ag eemen ha
educed ade ba ie s be ween hem o encou age open egionalism, we e
also common. The idea was o incen i ize egional de elopmen by p o-
mo ing ade wi hin he egion. Ha ing low egional a i s would encou -
age his exchange o goods. T ading blocs also had he bene i o being
able o be e nego ia e globally, an impe a i e gi en he ising p omi-
nence o Chinese and Sou heas Asian ma ke s. Regional ade had gained
The Ma ke Re u n (1980–2008) 107
some ac ion in he 1960s when he Andean Communi y and he Cen al
Ame ican Common Ma ke we e o med, bu hese g oups ound enewed
in e es and popula i y in he ma ke -d i en e a.11 The hopes we e ha
his ma ke -d i en app oach would s imula e de elopmen and add ess he
egional inequali ies be ween la ge and smalle coun ies.
In 1980, he La in Ame ican In eg a ion Associa ion (ALADI) o med
o p omo e egional de elopmen h ough p e e en ial egional a i s in
he hopes o mo ing owa d a common ma ke simila o he Eu opean
Union. ALADI egis e ed he egion’s ade blocs, such as Me cosu ,
which became an ope a ional ade bloc in 1991 and ini ially included
A gen ina, B azil, U uguay, and Pa aguay. In 1998, Me cosu and he
Andean Communi y began nego ia ing a Sou h Ame ican F ee T ade
A ea. Then, in 2006, DR-CAFTA b ough oge he Cen al Ame ica and
he Dominican Republic and he Uni ed S a es. The Paci ic Alliance ade
bloc, which included Chile, Colombia, Mexico, and Pe u, o med in 2011.
By ha ime, Panama, Mexico, and Cuba, along wi h Sou h Ame ica’s en
“La in” Ame ican coun ies, we e all membe s o ALADI. As o 2022,
Cen al Ame ican coun ies (excep Panama) we e no ALADI membe s,
bu hey did belong o he Cen al Ame ican In eg a ion Sys em, o med in
1991, and which included he Dominican Republic, Panama, and Belize.12
The lone coun y in he egion wi hou a ee ade o p e e en ial ade
ag eemen wi hin La in Ame ica was Hai i. While a membe o he WTO
and he Ca ibbean Communi y (domina ed by Anglophone coun ies),
Hai i was once again isola ed om he egion.
As o 2022, ue open egionalism had no been ob ained. T ade ba -
ie s in he o ms o quo as and a i s we e educed wi h a ca e ul dis-
man ling o he “geologic” laye s o p o ec ion buil up o e yea s, bu
he e is no single cu ency, and labo mo emen is es ic ed. Fu he mo e,
disman ling o al e ing domes ic policies, which a e also necessa y o libe -
alize ade, equi es di icul and almos impossible poli ical nego ia ions.
As a case in poin , one o he easons he F ee T ade A ea o he Ame icas
(FTAA) s alled in 2005 was because he Uni ed S a es, acing a powe ul
domes ic a m lobby, was unwilling o cede o Me cosu ’s calls o educe
subsidies o US a me s and ag icul u al expo e s. Wi hou a educ ion,
Me cosu expo s ha compe ed wi h Ame ican expo s, like A gen ine
whea and B azilian o anges, would be s a ing a a compe i i e disad an-
age. P oo o he challenges ha could occu equi ed looking no u he
han he sho - e m impac NAFTA had on Mexican co n p oduc ion.
A e NAFTA, Mexico became he leading ading pa ne o he Uni ed
S a es, ep esen ing 60 pe cen o he ade be ween he Uni ed S a es and
La in Ame ica. One o he p oduc s Mexico began impo ing om he
Uni ed S a es was co n. An iconic s aple o Mexico’s ag icul u al p oduc-
ion since he p e-colonial pe iod, US yellow co n, used o animal eed
108 The Ma ke Re u n (1980–2008)
and indus ial use, was cheape han he Mexican equi alen because i
was hea ily subsidized by he US go e nmen . While Mexico’s whi e co n
p oduc ion su i ed and e en ually inc eased (whi e co n is la gely o
human consump ion), i s ma ke g ow h was much less subs an ial han
yellow co n’s. Fu he mo e, while e en ually Mexico’s co n p oduc ion
s abilized, o he wo million people employed in he ag icul u al sec o
who los hei jobs and he millions o o he s who ecei ed lowe wages o
we e unde employed in he immedia e a e ma h, NAFTA b ough su e -
ing and did li le o elie e po e y.13
Complain s abou NAFTA also eme ged in he indus ial sec o .
Mexico paid lowe wages, so many Uni ed S a es i ms mo ed indus ial
p oduc ion o Mexico. Fo many people in he Uni ed S a es, his did no
ha e a signi ican , immedia e impac and had he po en ial o lowe he
cos o i ems ha once assembled in Mexico could be sold in he Uni ed
S a es. Fo employees in manu ac u ing companies ha eloca ed, like ca
manu ac u e s in De oi , o e en ca ca pe companies in ups a e Sou h
Ca olina, NAFTA c ea ed pocke s o ex eme impac in he Uni ed S a es.
Fo he Mexican communi ies whe e hese semi-skilled and skilled jobs
ans e ed, NAFTA also c ea ed pocke s o ex eme oppo uni y.
Mos g ow h in he manu ac u ing sec ion in Mexico, howe e , was
ela ed o he maquilado a sec o . These low- ech assembly plan s ake
ad an age o lowe cos labo and use impo ed inpu s o c ea e inished
p oduc s ha a e hen expo ed and sold a lowe p ices o a consume .
Maquilado as had exis ed as ea ly as he 1960s and could be loca ed in
a mul i ude o coun ies, bu ade libe aliza ion in he 1980s c ea ed he
e ile en i onmen o hei explosion. This was pa icula ly he case in
Mexico. Wi h he in oduc ion o NAFTA, maquilado as g ew om 455
wi h 130,000 wo ke s in 1982 o o e 2,000 employing o e 600,000
wo ke s ( wo- hi ds o whom we e women) in 1998. Assembling p oduc s
like ele isions and adios, maquilado as ope a ed wi h minimal o e sigh
o ensu e ha labo laws we e being ollowed. Wo ke s o en ea ned below
minimum wage in unsa e wo king condi ions and women’s ep oduc i e
igh s we e also exploi ed. Fe ili y was policed o p e en owne s om
ha ing o p o ide ma e ni y lea e and maquilado as also became magne s
o eminicides and gende iolence, as women e u ning om la e-nigh
shi s became a ge s along he Uni ed S a es/Mexico bo de .14
Whe eas NAFTA and he libe alized ade ag eemen s wo ked owa d
ba ie - ee exchange o goods, he logic did no ex end o indi iduals, as
wo ke s. In ac , one selling poin o NAFTA was ha i would slow unau-
ho ized immig a ion o Mexicans in o he Uni ed Sa es by c ea ing jobs
in Mexico. The impac was he opposi e: many Mexican ag icul u al jobs
disappea ed. This came on he heels o ano he Mexican cu ency c isis
and peso de alua ion in 1994. This cu ency c isis led o ano he inancial
c isis, commonly e e ed o as he Tequila C isis, which e oded Mexican
The Ma ke Re u n (1980–2008) 109
eal wages and had in e na ional e e be a ions. Coupled wi h skep icism
abou he Mexican go e nmen ( he leading p esiden ial candida e was
assassina ed he e in 1994), Mexicans we e jus as likely o mig a e wi hou
au ho iza ion a e NAFTA as hey we e be o e, and Mexican mig a ion
o he Uni ed S a es peaked in 2007. Howe e , he inc eased igh ening o
US immig a ion policies and en o cemen mean ha ewe immig an s
e u ned, leading o a subsequen inc ease in he esiden Mexican popula-
ion in he Uni ed S a es.
T ade libe aliza ion’s impac on ag icul u al jobs and ailu e o add ess
unde employmen se ed o inc ease ou -mig a ion in La in Ame ica.
Mig an s in he 1990s, howe e , o en bene i ed om social ne wo ks and
immig an communi ies es ablished du ing he 1980s. Bu he e we e also
new immig an s. Du ing he 1990s, modes s eams o Hondu an mig an s
began a i ing in he Uni ed S a es. This mo emen was e y closely ied
o he economic condi ions o co ee p oduc ion. When co ee p ices
d opped, Hondu ans looked elsewhe e o jobs; when co ee p ices ose,
ou -mig a ion dec eased. Hu icane Mi ch se ed as a u he ca alys o
he mass emig a ion o Hondu ans o he Uni ed S a es in 1998. The hu -
icane killed 10,000 people and displaced o e a million. In combina ion
wi h a new co ee c isis ha spanned om 2000 o 2003, a new wa e o
emig a ion ook hold. By he 2000s and 2010s, a new h ea incen i -
ized ou -mig a ion: ising gang iolence ha le he No he n T iangle (El
Sal ado , Gua emala, and Hondu as) wi h one o he highes mu de a es
in he wo ld.
Wi hin La in Ame ica, ce ain coun ies also eme ged as ne mig an
ecei e s. Cos a Rica, whose economy has consis en ly been one o he
mos s able in he egion, ecei ed mo e immig an s han i sen elsewhe e
be ween 1980 and 2020. This ne posi i e immig a ion o igina ed om
i s Cen al Ame ican neighbo s, pa icula ly Nica aguans, eloca ing in
sea ch o oppo uni y and e uge. By he ea ly 1990s, se e al o he coun-
ies also became ne ecei e s: Panama in 1992, and Chile in 1993. B azil,
La in Ame ica’s la ges economy, became a ne ecei e in 2010.
On he opposi e end o he spec um we e coun ies wi h nega i e
ne mig a ion a es. Mos o hese coun ies we e small: Hai i and he
Dominican Republic in he Ca ibbean; he No he n T iangle coun ies and
Nica agua in Cen al Ame ica; and Boli ia in Sou h Ame ica. El Sal ado
has consis en ly egis e ed emig a ion a es eigh o en imes highe han
he egional a e age. Mexico, which sends ou mig an s and se es as a
unnel o o he na ionali ies hoping o mo e o he Uni ed S a es, was also
an abo e-a e age ne sende h ough 2022.15
The s o y o Ma ía Ruiz’s amily p o ides an indi idualized mig a ion
expe ience. While Ma ía was bo n in No h Ca olina, bo h o he pa -
en s we e bo n in El Sal ado . Du ing he El Sal ado an Ci il Wa o
he 1980s and ’90s, Ma ía’s mo he ’s amily’s lands we e des oyed, and
116 The Ma ke Re u n (1980–2008)
Uni ed S a es. In e na ional T ade Adminis a ion. “Resea ch by Coun y.”
Accessed Oc obe 8, 2023. h ps://www . ade .go / esea ch -coun y.
Wo ld Bank. “Wo ld De elopmen Indica o (WDI).” Accessed Janua y 15, 2024.
h p://da abank .wo ldbank .o g/.
“Wo ld Inequali y Da abase.” Accessed Janua y 15, 2024. h ps://wid .wo ld/.
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7
When does a pa icula e en ep esen a sho -li ed shi and when does
i ma k a la ge mo emen ? O en only ime e eals he answe o his
ques ion. Tha being said, La in Ame ica’s esponse and eco e y o ex e -
nal shocks in he wen y- i s cen u y do seem o indica e an impo an
egional shi owa d mo e s abili y and s eps in he igh di ec ion in e ms
o de elopmen gains. The wo e en s highligh ed in his chap e , he 2008
Global Financial C isis and he 2020 COVID-19 pandemic, challenged
egions ac oss he globe, om Wes e n Eu ope and Asia o A ica and he
Ame icas. The egion’s esponse o hose c ises e eals an impo an de ia-
ion om pe iods be o e. La in Ame ica did no plunge in o a decade-long
ecession, and he economic down u ns in mos coun ies ollowing hese
shocks we e, o he mos pa , sho -li ed. The immedia e impac o bo h
e en s in La in Ame ica shows he ex en o he egion’s global connec i e-
ness: i is e en mo e in eg a ed in o a global economy han i was in he
pas . This chap e highligh s no ewo hy shi s and a eas o conce n in
his mos ecen pe iod o he egion’s his o y.
La in Ame ican go e nmen s ha e long aimed o os e mac oeconomic
s abili y, s i ing o economic cycles ha esemble undula ing hills a he
han jagged Rich e scale lines c ea ed by an 8.0 magni ude ea hquake.
In he wen y- i s cen u y, he e we e wo impo an de elopmen s. The
egion saw he eme gence o go e nmen - unded p og ams ha explici ly
add essed pe sis en issues o po e y and inequali y. I also saw a shi
owa d mo e de eloped inancial s uc u es ha included au onomous
cen al banks and spending, o eign ese es, and exchange a e policies
ha an coun e o he cu en economic end. To make con inued p o-
g ess, coun ies will need o con inue o u n owa d coun e cyclical meas-
u es, e o m ax policies, and add ess bo h high le els o in o mali y and
hea y eliance on emi ances in he egion. Finally, as much as his o y can
p o ide a cau iona y ale, coun ies should be mind ul o inc easing le els
o indeb edness coming ou o he mos ecen c ises.
7
Recen His o y (2008–2022)
This chap e has been made a ailable unde a CC-BY-NC-ND 4.0 licence.
DOI: 10.4324/9781003283843-7
10.4324/9781003283843-7
120 Recen His o y (2008–2022)
As a egion, La in Ame ica mus also con on pe sis en social and
economic inequi ies. His o ically ma ginalized g oups con inue o egis e
lowe s anda ds o li ing and ace signi ican challenges o social mobili y.
Fu he mo e, while he gap be ween he iches and poo es 10 pe cen in
each coun y has na owed in some cases, he egion con inues o egis e
high dispa i ies bo h be ween u al and u ban popula ions and be ween
coun ies. Ac oss he egion, u al popula ions a e h ee imes mo e likely
o li e below he in e na ional po e y line han u ban popula ions. This
means ha a amily imme sed in he in o mal economy and s uc u es in
a capi al ci y like Mexico Ci y, San iago, o Lima will ha e mo e access o
medical se ices and g ea e suppo o schooling han hei compa io s
li ing in emo e, isola ed communi ies, who lobby i elessly o eliable
wa e and elec ici y access. The di e ences be ween de elopmen indi-
ca o s wi hin he egion a e e en s a ke . When using he in e na ional
po e y line as an indica o , he a e o Hai ians li ing below ha s anda d
in u ban se ings is 24 imes highe han he a e o hei Chilean coun e -
pa s. The di e ence is e en mo e ja ing when compa ing u al popula-
ions: u al Hai ians a e 44 imes mo e likely o be li ing in po e y han
hei Chilean coun e pa s. Ul ima ely each na ion will need o e alua e
wha is igh o i in he momen , bu will also need o emb ace a collec-
i e s a egy o add ess egional conce ns.
Global Financial C isis, 2008 (New Yo k Ci y, Uni ed S a es)
On Sep embe 15, 2008, housands o Mexicans ga he ed in cen al plazas
a 10pm o ushe in Mexican Independence Day celeb a ions.1 In Cos a
Rica, El Sal ado , Gua emala, Hondu as, and Nica agua, Independence
Day celeb a ions we e al eady in ull swing. In Sou h Ame ica, Chileans
we e gea ing up o hei independence celeb a ion on Sep embe 18 h.
Bu he leading headline in La in Ame ica (and he es o he wo ld) on
Sep embe 15 h in 2008 was no na ional p ide, local pa ades, o his o ic
e lec ions; i was he collapse o he global inancial se ices i m Lehman
B o he s Inc., he la ges bank up cy in he his o y o he Uni ed S a es.
In he Uni ed S a es, he ea ly wen y- i s cen u y saw in es men banks
like Lehman B o he s u n o eal es a e as a solid in es men . These la ge
i ms we e backing smalle , mo gage-lending companies ha wo ked
di ec ly wi h homebuye s. As demand o housing in he Uni ed S a es
eached inc edible heigh s, high- isk loans became mo e equen as did
p eda o y lending p ac ices. By 2008, many new homebuye s ound hem-
sel es in o eclosu e. Unable o make hei mon hly mo gage paymen s,
hey los hei homes. As banks and in es men companies ied o sell he
o eclosed p ope ies ha hey had epossessed, housing supply quickly
ou s ipped demand, and o he i s ime in many yea s, housing p ices
ell. The mo gage bubble bu s and in es o s quickly shi ed in es men s
Recen His o y (2008–2022) 121
o easu y bonds. The Uni ed S a es s ock ma ke los one- hi d o i s
alue and despi e ecei ing millions o dolla s in bailou suppo om
he US go e nmen , Lehman B o he s was unable o wea he he allou .
Like many o he smalle banks and mo gage companies, when i decla ed
bank up cy on Sep embe 15 h, i became ano he ic im o he 2008
inancial c isis.2
While Lehman B o he s was a US company, i s ailu e had global ami-
ica ions ha eached La in Ame ica by 2009. In es o s no only pulled
money ou o he Uni ed S a es mo gage ma ke , bu hey also pulled
in es men s and capi al ou o La in Ame ica and o he eme ging ma -
ke s a ound he wo ld. Each o La in Ame ica’s eigh la ges coun ies
saw subsequen educ ions in GDP. As people became mo e wa y o La in
Ame ica, cu ency a es and s ock ma ke p ices ell in Mexico, A gen ina,
Chile, and B azil. By his poin in he book, his eac ion should no come
as a su p ise. Bu , in a change o e en s, he 2008–2009 c isis did no c e-
a e ull-blown na ional inancial c ises in mos o La in Ame ica, no did
po e y and unemploymen indica o s inc ease subs an ially. The ad ances
in he 2002–2008 pe iod slowed and, in some cases, came o a hal , bu in
gene al, eco e y was achie ed by 2009 bo h in e ms o s anda d p oduc-
ion measu es like GDP and de elopmen indica o s like po e y a es and
employmen a es.
In pas ins ances, such a global c isis o en disp opo iona ely impac ed
he egion’s mos ma ginalized popula ions. By 2008, howe e , many
La in Ame ican coun ies had es ablished a sa e y ne sys em ha educed
po e y and aided wi h de elopmen : condi ional cash ans e (CCT) p o-
g ams. A he end o he wen ie h cen u y, ma ke -d i en e o ms helped
s em in la ion and b ough some economic s abili y a he na ional le el,
bu pe sis en po e y con inued o encumbe a subs an ial sha e o he
egion’s popula ion. In he la e hal o he 1990s, La in Ame ica’s wo
la ges coun ies, B azil and Mexico, in oduced CCT p og ams, which
deposi ed s ipends in o bank accoun s o en olled amilies so long as hey
me ce ain condi ions conside ed impo an o educing po e y. By ak-
ing away p eca i y, CCT p og ams made gains owa d educing po e y
in he egion. La in Ame ican po e y a es d opped om 44.1 pe cen
in 2001 o a low poin o 27.8 pe cen in 2014. The sha e o he popula-
ion li ing in ex eme po e y also d opped in he same ime ame om
12.2 o 7.88 pe cen . The e was a sligh inc ease in subsequen yea s, bu
a es la gely s abilized up un il he 2020 global pandemic. Equally no able
was minimal a ia ion in hese ends ac oss coun ies. Only Gua emala,
Hondu as, Mexico, and Venezuela de ia ed somewha om his down-
wa d shi in po e y a es.3
Cash ans e p og ams ha e gained popula i y globally in he wen y-
i s cen u y, bu La in Ame ica was a he angua d o hei implemen a ion.
122 Recen His o y (2008–2022)
The ela i ely s ong business and economic cycle o he ea ly wen y- i s
cen u y o und he p og ams as well as ini ial successes in Mexico and
B azil saw o he coun ies launch CCT p og ams. By 2006, 18 di e en
go e nmen s dis ibu ed cash o en olled amilies (See Table 7.1). Fo poo
amilies, hese cash ans e s we e essen ial o daily li e, ep esen ing abou
20–25 pe cen o household income in 2010.
Speci ic condi ions ha en ollees needed o mee a ied om p og am o
p og am, bu mos cen e ed on educa ion, heal h, and/o nu i ion equi e-
men s. Examples included child en ha ing o en oll and a end school o
p egnan mo he s isi ing heal h clinics in o de o ecei e cash paymen s.
Many La in Ame ican coun ies’ CCT p og am goals connec ed o he
Uni ed Na ion’s Millennium De elopmen Goals se in 2000. The UN’s
goals we e o e adica e ex eme po e y and hunge ; o achie e uni e sal
p ima y educa ion; o p omo e gende equali y and empowe women; o
educe child mo ali y; o imp o e ma e nal heal h; o comba diseases
such as HIV/AIDS and mala ia; o ensu e en i onmen al sus ainabili y;
and o c ea e a global pa ne ship o de elopmen . The syne gy be ween
Table 7.1 Ini ial condi ional cash ans e p og ams in La in Ame ica
Fi s wa e – ounded p io o 2000
B azil
Mexico
Hondu as
Second wa e – ounded 2000–2004
Cos a Rica*
Nica agua
Colombia
Chile
Ecuado
Thi d wa e – ounded a e 2004
A gen ina
Dominican Republic
El Sal ado
Panama
Pe u
Boli ia
Cos a Rica
Gua emala
Pa aguay
U uguay
Fou h wa e – ounded a e 2010
Hai i
Sou ce: ECLAC, “Non-con ibu o y Social P o ec ion P og ammes Da abase: La in Ame ica
and he Ca ibbean.” h ps://dds .cepal .o g /bpsnc /cc . Accessed Oc obe 23, 2023.
No es: * Cos a Rica i s p og am, implemen ed in 2000, only las wo yea s. In 2006, hey
began a new CCT p og am.
Recen His o y (2008–2022) 123
La in Ame ican CCT p og ams and UN goals mean ha coun ies could
o en coun on addi ional unding suppo om in e na ional lending ins i-
u ions like he In e na ional De elopmen Bank.
Key o he CCT p og ams’ ini ial success was cen e ing women and gi ls
in he design and implemen a ion. When go e nmen s p o ided cash o
amilies, paymen s wen o mo he s. The logic, which in gene al was con-
i med, was ha mo he s would be mo e likely o p io i ize spending on
goods and se ices ha imp o ed s anda ds o li ing, such as highe -qual-
i y ood and school supplies, han would a he s. P og ams also di ec ly
add essed women in he condi ions o cash ans e s, equi ing p e-na al
isi s o heal h clinics o awa ding la ge ans e s o gi ls’ school a end-
ance han o boys’.4 P og ams ended o a ge women h ough in o ma-
ional and aining sessions on nu i ion and en us ed hem wi h con eying
hei acqui ed knowledge o hei social ne wo ks and he b oade popu-
la ion. This knowledge and he equi emen s we e a imes a odds wi h
communal p ac ices o ep esen ed addi ional labo o hese women o
pe o m h oughou he day, ea u es ha ha e led o c i iques o he p o-
g ams, bu hey subs an ially al e ed he li es o many en ollees.
The CCT p og ams a e no wi hou hei weaknesses and c i ics, and
hei e icacy is limi ed by he quali y o he se ices a ailable o en ollees.
Howe e , hey do seem o ha e kep po e y in he egion a bay. Some
condi ions mo e di ec ly add ess de elopmen indica o s, while o he s
con ibu e o a mo e holis ic imp o emen . Fo CCT p og ams o con-
inue o ma u e, he combina ion o condi ions ha need o be me mus
con inue o be sc u inized. The e is ela i e consensus ha p og ams mus
also begin o ocus on imp o ing he quali y o se ices, like school and
heal h clinics, and e-e alua e he unding s uc u e o such p og ams.
When commodi y p ices we e high, he p og ams we e mo e easily unded.
When hose p ices dec eased, much o he unding o sus ain hese p o-
g ams disp opo iona ely impac ed La in Ame ica’s ela i ely small mid-
dle class ins ead o i s ex emely weal hy – he op 1 pe cen ea ne s who
con ol 20 pe cen o he egion’s o e all weal h. Re ising he egion’s
ax s uc u e, pa icula ly mo ing away om axes ha disp opo iona ely
bu den he poo , such as sales o anspo a ion axes, owa d hose wi h
a mo e equi able s uc u e o e en one ha places a la ge bu den o pay-
men on he ich, will be an impo an s ep owa d ensu ing a con inued
educ ion in egional po e y and inequali y.
The shi ha se e al coun ies made in he wake o he Los Decade
and subsequen c ises in he 1990s om p ocyclical owa d coun e cy-
clical mone a y (in e es a es and money supply) and iscal (spending
and ax) policies helps explain some o he ela i e esiliency o he 2008
c isis.5 Fo much o he la e hal o he wen ie h cen u y, many La in
Ame ican coun ies ollowed p ocyclical policies, which e ec i ely ol-
lowed he di ec ion o cu en economic cycles. Du ing economic boom
124 Recen His o y (2008–2022)
imes, go e nmen s inc eased spending and lowe ed axes, accep ed and
encou aged mo e capi al in lows om lende s o in es o s, and inc eased
he balance o paymen s. The p oblem wi h his app oach, especially in a
egion like La in Ame ica s ill hea ily connec ed o and wi h a compa a-
i e ad an age in many commodi y ma ke s, is ha a p ocyclical esponse
du ing economic down u ns equi es aus e i y budge s and iscal and mon-
e a y shi s. In o he wo ds, he highs a e high, bu he lows a e eally low
(see he 1982 Peso C isis in Chap e 6). This ola ili y c ea es eno mous
social challenges and makes i di icul o sus ain bo h g ow h and de elop-
men on a pe sonal and na ional le el.
By 1998, a he same ime ha he i s CCT p og ams we e being
implemen ed in La in Ame ica, he ECLA began ad oca ing o and se -
e al go e nmen s began in oducing coun e cyclical mone a y and iscal
policies. These policies coun e ac cu en business cycles h ough choices
ha pull agains he cu en end. One goal is o y o s em in es o
eupho ia in imes o boom o c ea e mo e s abili y and us du ing eco-
nomic down u ns. In La in Ame ica, like in mos de eloping economies,
he mos commonly used coun e cyclical ools add ess he amoun o o -
eign cu ency coming in o and ou o he coun y. This a iable is con-
nec ed o exchange a es, in e es a es, and he balance o paymen s. In
con olling his mone a y aspec , coun ies can educe ola ili y a he
na ional and local le els.
In e ms o exchange a es, he alue o a cu ency ela i e o ano he
cu ency, he e has been a mo e he e ogeneous app oach in La in Ame ica
in he wen y- i s cen u y. A ew, mos ly smalle , coun ies ha e ixed
exchange a es, meaning ha hei alue is pegged o, o mo es in conjunc-
ion wi h, he US dolla . Some coun ies chose a a ge exchange a e bu
allowed a deg ee o luc ua ion a ound ha a e. This c awling peg means
ha he cu ency’s alue could shi wi hin a couple o pe cen age poin s,
bu by design would a oid he ola ili y ha can accompany a comple ely
lexible exchange a e. This app oach also p ese es he iscal and mon-
e a y au onomy o he na ional go e nmen ha ixed and dolla ized
economies lack. In p ac ice, howe e , hese a ge ed exchange a es we e
di icul o achie e, and mos coun ies shi ed owa d lexible exchange
a es. Ha ing a lexible exchange a e means ha he o icial cu ency’s
alue shi s depending on i s global supply and demand. In hese coun ies,
he cen al bank plays a c ucial ole in implemen ing imely coun e cyclical
mone a y policies o mi iga e ola ili y. Wi h ixed o semi- ixed exchange
a es, a cen al bank can lowe i s exchange a e o encou age expo s o
o a ac o eign in es men . Wi h a lexible exchange a e, al hough a
cen al bank can u ilize in e es a es and o he ools o encou age money
lows in one di ec ion o ano he , i is he ma ke i sel ha egula es he
alue o one cu ency ela i e o ano he .
Recen His o y (2008–2022) 125
O he eigh la ges economies in La in Ame ica, which ep esen 90
pe cen o he egion’s GDP, Chile led he way in implemen ing such
coun e cyclical measu es, bu Mexico, B azil, Colombia, and Pe u also
in oduced coun e cyclical policies. In con as , A gen ina, U uguay, and
Venezuela main ained many p ocyclical policies. When he 2008 inancial
c isis hi , i became clea ha one o he mos e ec i e coun e cyclical
measu es ha coun ies had implemen ed was wha could be desc ibed as
a na ional eme gency und. Ins ead o spending all he o eign exchange
coming in du ing he economic upswing o he i s decade o he wen y-
i s cen u y due o high commodi y p ices, in es men s, and he like, cen-
al banks buil up he o eign exchange ese es. This se aside dolla s
o an ine i able ainy day. The 2008 c isis was jus ha so o economic
down u n. Go e nmen s u ned owa d he o eign ese es o bo h s a-
bilize cu encies and o help mee go e nmen commi men s (like unding
CCT p og ams). To u he u n he ide and shi ou o he c isis, some
go e nmen s wi h coun e cyclical policies e en c ea ed ax incen i es. The
esul in 2008 o mos coun ies was an economic down u n ha was
sho e and less d ama ic han in c ises pas . Those coun ies wi h coun-
e cyclical policies a ed e en be e .6
Go e nmen s encoun e ed ano he challenge in 2014 when commodi y
p ices ell. One coun y wi h p ocyclical policies ha ailed o uly eco e
was Venezuela. When oil p ices declined, Venezuela’s economy, an oil p o-
duce , su e ed. The economy con inued o con ac , losing 45 pe cen o
i s alue by 2018. Residen s ound hemsel es mi ed in high in la ion, a
sh inking economy, wi h poo access o heal hca e, and acing poli ical
ep ession. Al hough he Chá ez and Madu o go e nmen s’ pink ide (see
Chap e 6) campaigns ca e ed o Venezuela’s mos ulne able popula-
ions, he inabili y o con ol in la ion, add ess sho ages, gene a e jobs,
and secu e ee elec ions c ea ed mass p o es s. The poli ical, economic,
and social s ess was so high ha millions o Venezuelans le he coun y:
oughly 20 pe cen o Venezuela’s popula ion had emig a ed o led by
2018, many seeking e uge in he neighbo ing coun ies o Colombia and
B azil. On he e e o he nex ex e nal shock, he 2020 global pandemic,
Venezuelans al eady aced signi ican challenges. O he coun ies did no
a e as poo ly, bu he heyday o CCT p og ams waned in he second dec-
ade o he wen y- i s cen u y.
COVID-19 Pandemic, 2020 (Global)
In Decembe 2019, a new, highly con agious and deadly i us began a -
aging China. By Janua y and Feb ua y o he ollowing yea , i s global
sp ead was appa en and in Ma ch 2020, he COVID-19 global pan-
demic was decla ed. I shu down bo de s and s opped all bu he mos
essen ial wo k. Masking mi iga ed some isks, bu go e nmen -manda ed
132 Recen His o y (2008–2022)
11 O iginal eads “Mi pueblo pide libe ad, no más doc inas / Ya no g i emos
pa ia o mue e sino pa ia y ida / Y empeza a cons ui lo que soñamos / Lo
que des uye on con sus manos.” This pa icula line e e ences he na ional
an hem, which quo es he Cuban e olu iona y and in ellec ual José Ma í in
his call o “pa ia o mue e.”
12 López, “Cuba: The July 11, 2021, P o es s.”
13 “Cuba Ne Mig a ion Ra e 1950–2024,” Published online a h ps://www .mac-
o ends .ne /coun ies /CUB /cuba /ne -mig a ion. Accessed Feb ua y 14, 2024.
14 Bé ola and Ocampo, Economic De elopmen , p. 251.
15 The majo i y o La in Ame ica’s lowes quin ile o ea ne s a e employed by he
in o mal economy.
16 In e na ional Mone a y Fund, “FAOSTAT: Consume P ice Indices.” h ps://
www . ao .o g / aos a /en/ #da a /CP. Accessed Janua y 24, 2023.
17 Many YouTube ideos ci cula ed du ing he p o es s. Some s ill emain acces-
sible, o example, h ps://you u .be /9o OOES7dMQ. Accessed July 31, 2023.
18 Dolla s began o be used o some eal es a e ansac ions and sa ings in
A gen ina’s u ban en i onmen s in he la e 1970s.
19 The Panamanian balboa and he Uni ed S a es dolla a e bo h o icial cu en-
cies.
20 When Madu o was elec ed in 2018, he alidi y o his elec ion was ques ioned.
The p esiden o Venezuela’s Na ional Assemby, Juan Guaidó, decla ed himsel
as Venezuela’s ac ing p esiden . The e was much suppo behind Guiadó, bu
ul ima ely, Madu o emained p esiden . The c isis, howe e , likely opened he
doo o changes in economic policies, such as dolla iza ion.
21 Ma co A ena, e al. “Venezuela’s mig an s b ing economic oppo uni y o La in
Ame ica.” In e na ional Mone a y Fund. Decembe 7, 2022. h ps://www .im
.o g /en /News /A icles /2022 /12 /06 /c - enezuelas -mig an s -b ing -economic
-oppo uni y - o -la in -ame ica. Accessed Janua y 14, 2024.
Sugges ed Digi al, Media, and Li e a u e Resou ces
Cas illo, Paola, and Tiziana Panizza Mon ana i. 74m2. San F ancisco: LATINBEAT,
2018.
Economic Commission o La in Ame ica and he Ca ibbean (ECLAC).
“CEPALSTAT: S a is ics and Publica ions.” Accessed Janua y 5, 2024. h ps://
s a is ics .cepal .o g /po al /cepals a /dashboa d .h ml ? heme =1 &lang =en.
In e na ional Mone a y Fund. Food and Ag icul u e O ganiza ion o he Uni ed
Na ions. “FAOSTAT.” Accessed Janua y 24, 2024. h ps://www . ao .o g /
aos a /en/ #da a.
Muniz, Vik, and Lucy Walke . Was e Land. Almega P ojec s and 2 Filmes, 2009.
Uni ed Na ions. “We Can End Po e y: Millennium De elopmen Goals and
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Each La in Ame ican coun y has i s own unique economic his o y, bu
clea e idence o egional pa e ns, challenges, and s uc u es ha e eme ged
o e he pas 220 yea s. Con on ing how he egion esponded o global,
na ional, and local e en s helps o unde s and hese endencies. The e en s
elabo a ed in his ex highligh he pa icula impac ha commodi y
expo s, na ional deb , ola ili y, ma ginaliza ion, and in o mali y ha e
played in he egion. Howe e , hese a e a om he only egional enden-
cies, and u u e esea ch will need o examine mo e closely he in e sec-
ions be ween he egion’s economic his o y and en i onmen al and (im)
mig a ion his o ies.
Commodi y expo economies and go e nmen app oaches o expand-
ing and including hose sec o s in o na ional economic s a egies we e, a e,
and likely will emain, cen al o unde s anding he egion. La in Ame ica
ea u es as na u al esou ces, inc edible biodi e si y, and empe a e
and opical ag icul u al zones. Indus ializa ion, echnological inno a-
ion, and economic ans o ma ion may subs an ially al e , bu will no
ully e adica e, hose esou ces. In he new na ions pe iod, he allu e o
hose esou ces b ough in ou side in es o s and saw he sha e o la ge-
scale landholdings inc ease. Du ing he expo -led g ow h pe iod, many
na ional decisions e ol ed a ound connec ing hose esou ces o he
global economy. In he s a e-led pe iod ha ollowed, he ECLA delinea ed
how he commodi y expo sec o ea u ed in he de elopmen o global
s uc u al inequi ies. In he mo e ecen pas , he mo e owa d g ea e eco-
nomic di e si ica ion is one ha includes new commodi y expo s like soy
and o anges, alongside mo e adi ional p oduc s like coppe and co ee.
Expanding commodi y expo p oduc ion equi ed a conside able
in es men . So oo did building new na ions, keeping impe ial ad ances a
bay, and inancing in an indus y g ow h. In La in Ame ica, hose in es -
men s ha e o en ansla ed in o high ex e nal deb a ios, o he amoun
o money owed o ou side s as compa ed o GDP. Coun ies ha e s ug-
gled o mee in e es and deb paymen s and such a high deb bu den has
Conclusion
This chap e has been made a ailable unde a CC-BY-NC-ND 4.0 licence.
DOI: 10.4324/9781003283843-8
10.4324/9781003283843-8
136 Conclusion
o en p o ed inc edibly des abilizing. The deb esponsibili ies ha e e-
quen ly ansla ed in o educed esou ces o esiden s, bu de aul s ha e
educed c edibili y in in e na ional ma ke s. In e ec , he e is such a hing
as oo much na ional deb . F om he 1825 Ag eemen be ween Hai i and
F ance o Mexico’s Cinco de Mayo and he 1980s, known as he egion’s
Los Decade, many o he episodes de ailed in his book ha e some connec-
ion o he egion’s high deb .
Na ional deb and commodi y expo s’ suscep ibili y o global p ice
luc ua ions ha e con ibu ed o La in Ame ica’s high ola ili y. His o ic
e o s o ackle global p ice luc ua ions p o ed la gely ine ec ual and
unsus ainable h ough he egion’s Los Decade. Recen his o y sugges s
ha adop ing coun e cyclical iscal and mone a y policies can lessen
egional ola ili y. These ini ia i es ha e he po en ial o be poli ically
unpopula , especially du ing economic upswings when he coun e cyclical
measu es can be seen as mo e es ic i e in a egion i e wi h inequali y
and many communi ies ha ha e long con on ed ma ginaliza ion. The
app oach, howe e , migh jus lessen he du a ion and magni ude o eco-
nomic down u ns, p o iding he much-needed economic s abili y ha has
o en eluded La in Ame ica and i s esiden s.
Te ms like ola ili y, commodi ies, and di e si ica ion, no o men ion
exchange a es, dolla iza ion, and capi al ma ke s, can seem disconnec ed
om he o dina y pe son’s daily li e. These mac o concep s, howe e , a e
in ica ely linked o e e yday and indi idual decisions anging om wha
ood o buy o he amily’s nigh ly meal o deciding whe e and when o
mo e. In calling a en ion o he challenges and oppo uni ies ha hese
somewha impe sonal e en s and ends made in e e yday people’s li es,
his book also e eals he egion’s challenge wi h pe sis en ma ginaliza-
ion and he g owing in o mali y, pa icula ly in u ban se ings, ha cha -
ac e izes he egion.
Indi iduals a e uniquely a ec ed by he b oad and la ge economic
changes in he egion. Conside ing indi idual expe iences collec i ely can
yield impo an insigh s. I becomes appa en ha adi ionally ma ginal-
ized g oups o en con inue o be ma ginalized. La in Ame ican colonial
socie y was a highly s a i ied hie a chy and inc edibly di e se bo h acially
and e hnically. While some coun ies had la ge Indigenous popula ions,
and o he s concen a ed A o-descended popula ions, whi e, male, eli es
om Eu ope consis en ly occupied he op o he hie a chy. Independence
o e ed li le change in e ms o he hie a chical s uc u e, and by he end
o he nine een h cen u y he e was an e en g ea e concen a ion o weal h
among whi e eli es. Heal h and educa ion indica o s, as well as land con-
cen a ion indica o s, show he minimal ad ancemen o he lowe classes
ela i e o hei eli e coun e pa s. These inequali ies con inued o pe sis
and a imes e en expanded in he wen ie h and wen y- i s cen u ies.
Conclusion 137
The logic ha economic g ow h will ickle down and lead o economic
de elopmen simply does no pan ou when we look o La in Ame ica.
While each economic ime pe iod p oduced some e y eal economic win-
ne s, he e we e coun less mo e indi iduals eking ou an exis ence. A e
B azil abolished sla e y in 1888, he las coun y in he egion o do so,
ecen ly eed sla es, as well as mos A o-descendan s, aced subs an ial
p ejudice in ge ing jobs and had o con on housing disc imina ion. In
he egion’s u al a eas, ag icul u al labo e s and peons endu ed exploi a-
ion and disloca ion. Many ma ginalized g oups mo ed o u ban cen e s.
Once he na ion s a e expanded o o e social se ices mo e consis en ly
in he wen ie h cen u y, like heal hca e and social secu i y, ola ili y o en
jeopa dized hose p og ams. An addi ional challenge o he egion’s poo
has been he ax s uc u e. The ax a es aised mos equen ly a e hose
ha mos impac he poo ’s daily li es, while he p og essi e axes, like
income axes, emain la gely inconsequen ial.
La in Ame ica’s poo , howe e , a e a om incapable. Thei ingenui y
is eadily appa en in he complex in o mal economies ha ha e de el-
oped in u ban se ings, pa icula ly in he las 125 yea s. When e e ans
and mig an s we e unable o secu e housing in u ban cen e s in he la e
nine een h cen u y, hey no only buil hei own houses, bu c ea ed en i e
communi ies. I hey ound hemsel es on he edge o po e y o sa ing
o some hing new, hey sold lo e y icke s, peddled wa es b ough om
Eu ope o ood cooked in c amped ki chens, o ound o he c ea i e ways
o b ing in addi ional income.
As he wen ie h cen u y p og essed and ci ies g ew, La in Ame ica
became a p edominan ly u ban egion. Unsu p isingly, he ole o in o -
mali y in na ional economies ballooned. By 1980, one in i e adul s wo k-
ing in a La in Ame ican ci y was employed in he in o mal economy. The
a io changed li le in he ollowing 40 yea s. The omnip esence o in o -
mali y is unlikely o be elimina ed in he egion, because while 20 pe cen
o he popula ion is employed in he in o mal ma ke , upwa ds o 80–90
pe cen o indi iduals buy o consume hings gene a ed in he in o mal
economy.
When conside ed collec i ely, hese ends poin o a 200-yea his-
o y o unde de elopmen . La in Ame ica has always been a li le behind
whe e i was expec ed o be. In he la e nine een h and ea ly wen ie h
cen u y, de elopmen was equa ed wi h mode niza ion. S a e o icials
s o e o inc ease he ya ds o clo h being p oduced o he numbe o new
machines in ope a ion. La in Ame ica’s ac ual ou pu was less han i s
popula ion and na ional income would sugges , meaning ha e en when
new ag icul u al and indus ial equipmen was impo ed, i was no u i-
lized e icien ly. As he meaning o de elopmen ans o med and came
o encompass da a like li e acy and e ili y a es, he egion was s ill
138 Conclusion
behind whe e i was expec ed o be globally. La in Ame icans a ended
less school and had highe e ili y a es han o he coun ies wi h simila
GDP pe capi a p o iles. As we mo e u he in o he wen y- i s cen-
u y, ou de ini ion o de elopmen will likely con inue o e ol e. Maybe
unde hese de ini ions La in Ame ica will be able o shake he yoke o
unde de elopmen .
Gi en he challenges associa ed wi h clima e change, i is likely ha
g ea e a en ion will be paid o he in e sec ions be ween en i onmen-
al and economic his o y. This ex makes mos ly angen ial e e ences
o impo an ecological and en i onmen al changes ha occu ed in he
wen ie h cen u y. Ea ly on, ail oad acks expanded he ag icul u al
on ie . La e , indus ializa ion and s a e-led g ow h ha nessed hyd au-
lic powe and expanded highways and ag icul u al p oduc ion. Today,
mining and ag icul u al incu sions in o opical ain o es s ha e cap u ed
in e na ional a en ion because o he i e ocable lo a and auna des uc-
ion and he impac on global wea he pa e ns. So oo ha e c ude oil
explo a ions o sho e and h ough emo e a eas. Each o hese changes
dis up ed complex ecosys ems and esul ed in unin ended esul s, o ex e -
nali ies. To unde s and whe he he ne economic esul was posi i e o
nega i e equi es much mo e subs an ial and delibe a e esea ch.
I we a e o unde s and how en i onmen al his o y impac s day- o-day
li es and decisions, we mus look a he economic ou comes. Schola s ha e
begun explo ing he economic ela ionship associa ed wi h clima e change
by examining he in e sec ion o na u al disas e s and (im)mig a ion. This
ex , o example, highligh s he numbe o indi iduals seeking empo-
a y p o ec ed s a us a e Hu icane Mi ch decima ed much o Cen al
Ame ica. Less d ama ic episodes can be jus as in luen ial. Mo e equen
mud slides and d ough s, o example, a e also e ec i e a incen i izing
mig a ion.
Na u al disas e s a e jus one o many ac o s o impac immig a ion
and mig a ion. Po en ial mig an s also weigh conside a ions like poli ical
ins abili y, social connec ions, amily, wande lus , and u u e economic
p ospec s no only o e a single li e ime, bu also o u u e gene a ions.
This ex has ouched on hese mo i a ions in discussing Eu opean immi-
g an s a i ing in he Sou he n Cone in he 1890s and Mexican immi-
g an s mo ing o he Uni ed S a es in he 1990s. The egion’s his o y wi h
mig a ion is much mo e complex. I includes o eign labo e s b ough in o
ha es bananas and suga cane. I includes ma ginalized u ban esiden s
accused o “ ag ancy” who we e o ced o wo k in he ag icul u al sec-
o . I also includes u al mig an s mo ing o u ban cen e s and wo king
in o mal and in o mal jobs o send money back home. E ec i ely, he
egion’s immig a ion and mig a ion his o y has much o each us abou i s
economic his o y.
Conclusion 139
La in Ame ica’s economic his o y, simila ly, has much o each us abou
bo h he egion’s gene al pas and i s place in global economic his o y.
An in e disciplina y app oach, one ha alues, ca e ully conside s, and
b ings economis s, his o ians, and o he disciplines in o con e sa ion wi h
one ano he , can p o ide ha his o y. Who knows wha possibili ies such
con e sa ions will open o he u u e?
En ies in i alics deno e igu es; en ies in bold deno e ables.
1825 Ag eemen 22–24, 136
1857 Cons i u ion, Mexico 32, 33
1917 Cons i u ion, Mexico 59
ABC Me alwo ke s’ S ike 70,
88–90, 92
aboli ion 30, 38–42, 137
Accau, Jean-Jacques see Pique
mo emen
A ican: economies 8; p ac ices 2
A o-La iname ican: bo n in A ica
22–23; demog aphics 23, 40–41;
labo o ce pa icipa ion 3–4, 54;
ma ginaliza ion 14, 26, 42, 82,
113, 126; and mes izaje 21, 45; and
sla e y 3, 9, 39–42
Andes 33
ag a ian e o m see land e o m
ag icul u al sec o 87, 107–08
Allende, Sal ado 84
Alliance o P og ess 84–85
Amazon 9, 58
ana cho-syndicalism 65
Andean Communi y 78, 106–07
A gen ina 2, 4, 5, 16, 132; deb
de aul in 38, 45–46, 112, 114;
dispa i ies wi hin 59, 63, 88;
dolla iza ion 130; economic policies
89, 107; immig a ion in 40, 42–44;
in la ion 102; labo mobiliza ion in
64, 65; li e acy achie emen s 86;
loans o 25, 112; mid-sized a ming
in 55, 57–58; nine een h-cen u y
poli ical ins abili y 25, 28, 32–34;
u baniza ion and indus ializa ion
62, 71, 72–75, 78; see also
au ho i a ianism; Gue a a, E nes o
Che; P ébisch, Raúl
augmen ed human de elopmen index
(AHDI) 5, 12–13, 18
au ho i a ianism 70; Cold Wa con ex
84–89; nine een h cen u y 2, 32, 54;
populis 74, 130; see also dic a o
backwa d linkage see linkage
balance o paymen s 17, 102, 111, 124
Banamex 47
bananas 53, 56–57, 60, 72, 138;
see also commodi y
banana zone 53, 57, 60
banking 34, 45–47; bank ailu e 46–
47, 70–71, 102, 112, 121; banking
e o ms 33–34, 45–47, 73; cen al
bank 47, 70, 124–25; de elopmen
banks 73–74, 76, 89–90, 100–01,
123; o eign banks 24, 45–47, 55,
90, 100
Ba ing B o he s 46
Ba ing C isis 39, 45–47, 53, 112
Ba is a, Fulgencio 81
Ba le o Puebla 31
Belize 6, 107
Bé ola, Luís 2, 7, 17
Black see A o-La iname ican
Boli ia 3, 4, 9, 11, 128; commodi ies 9,
84, 89; discon en in 92; dispa i ies
in 58, 83; economic policies 29,
40, 122; emig a ion om 104, 109;
ins abili y 27, 33, 130; loans o 28
Bolshe ik Re olu ion 65
Bo acudo 57
Bou bon Re o ms 21
Index
