Rating: 7.9/10.
Book about the recent history of Latin America — despite encompassing approximately 20 countries and spanning across two continents, the countries in this region has had remarkably similar histories and has faced similar societal issues: inequality, lack of development, political instability, crime, etc. Compared to the Western World, Latin America started to fall behind in the 19th century. The reasons are multifaceted – some proposed causes include: having an export oriented economy, Hispanic-based culture, and extractive economic institutions – but none of them alone is sufficient to explain the disparities.
The Spanish set up highly unequal systems in Latin American countries, with large indigenous and black populations controlled by a small number of whites. After gaining independence from the Spanish, life for most people did not improve: the same inequality persisted under dictatorships. In the 1970s, most countries in Latin America were still dictatorships, but nearly all of them transformed into democracies only 30 years later. The patterns were similar – one by one, the dictatorships mismanaged economy of their countries, leading to hyperinflation, financial crises, unemployment, debt defaults, and eventually a coup that replaces the government with a democracy.
Two Latin American countries with unique histories are Cuba and Venezuela. Cuba unexpectedly experienced a communist revolution in 1959, even though similar attempts in other countries were unsuccessful (e.g., Che Guevara attempted the same feat in Bolivia but failed and was killed). The country was forced to accept a small amount of free market capitalism after the collapse of the Soviet Union in the 1990s, and in recent years, Cuba is becoming increasingly capitalist as the communist system proves to be untenable.
Venezuela had the unique luxury of having one of the world’s largest oil reserves, allowing it to spend generously on social programs when oil prices were high. However, the country’s infrastructure and government spending was wildly inefficient, and it was unable to diversify its economy. Falling oil prices in 2013 led to hyperinflation, and now, Venezuela is one of the poorest nations in the region.
The development histories of other countries are illustrated by case studies in Brazil and Mexico. Leaders in Brazil and Mexico attempted many reforms to stimulate the economy and control violence and corruption, but were met with mixed results. Poor control over inflation and regulation of monopolies made economic growth slow; corruption hindered the growth of formal companies, so that much of the population still works in the much less efficient informal sector. Therefore, Latin American manufacturers were unable to compete against China, and the region was stuck with less profitable commodity export economies.
Although progress has been slow, the overall trend is in the right direction. Democracies have been less effective than those in Western countries, due to implementation details such as balances of power between branches of government, how parties are funded, etc, but despite their flaws, they have been resilient to reverting to dictatorships.
Latin America is stuck in the “middle income trap”, where the easy gains of urbanising the workforce have already been done, and further improvements will depend on improvements to education, healthcare, and infrastructure. The most important trading partners for Latin American countries are the United States and the EU, but Latin America is of relatively minor importance to these countries. There have been some attempts to forge alliances between Latin American countries, but with limited success since each country struggles to maintain control within its borders.
Overall, this book gives a good bird’s eye view of the political and economic situation in Latin America, it is an excellent resource for a comprehensive overview of the region. The writing is quite dense, as the author covers a long series of political events, reforms, economic policies, etc, of a dozen countries over a span of 200 years. The author is also reluctant to commit to any single root cause for why Latin America has fallen behind Western countries and Asia, instead giving a long list of contributory factors.
