Latin America Essay, Research Paper
In attempting to establish the current state of development in Latin America,
historical chronology serves as the foundation necessary for a comprehensively
logical position. Latin American development has evolved in distinct phases,
which lead to the present day standings of the politics and peoples throughout
the region. The culmination of distinct historical attributes: conquest,
colonialism, mercantilism, captalism, industrialism, and globalism, serve as the
developmental path from the past, to allow an understanding of the current state
of development. In overview of this, as perceived by Latin American governments,
the four primary areas of concern as reported from the 1994, ?Summit of the
Americas? held by heads of 34 countries, were as follows: (1) preserving and
strengthening the community of democracies of the Americas, (2) free trade area
of the Americas (FTAA), (3) eradicating poverty and discrimination in the
hemisphere, (4) education (Americas Net). Each issue examined by members of the
summit involves aspects of politics and economics. The desired changes in Latin
American society can be shown connected to these two subject areas, as held by
authors Skidmore and Smith, ?From modernization theory we take the casual
premise that economic transformations induce social changes which, in turn, have
political consequences.?(Skidmore and Smith, 10) The understanding of
historical background, an awareness of current political goals, and the
incorporation of modern political and social theory allow an increasingly
accurate depiction of the state of development in Latin America to be
constructed. Development, largely defined as bringing to a more advanced or
effective state, stands often as the product of the successful management and
collaboration of economic, social, and political areas. The current state of
development should therefore gauge today?s level of success in creating a more
advanced and effective state. In considering these criteria, development in
Latin America may best be described as progressively transitional, continually
improving, yet still lacking stability and permanence in structure. This
apparent lack is causing disfunctionalism of governmental bodies to be
successfully consistent in altering the povertized sectors of society. The
ultimate pattern perpetuates the social stratifications of Latin America, which
only continue to erode the workings of development at large. To break such a
cycle, successful structural functionalism under governments of stability and
permanence must be achieved. Economics: Economics holds key importance in an
array of political and social workings in all areas of the world. The factor
making this sector a central component in successful development is that
economics often serves as the catalyst between developmental areas. Even in
basic terms as proposed in the modernization theory employed by authors Skidmore
and Smith, economics alters the society, and this in turn will play a crucial
factor in political outcomes, ? Latin America has occupied an essentially
subordinate or dependent position, pursuing economic paths that have been
largely shaped by the industrial powers of Europe and the United States. These
economic developments have brought about transitions in the social order and
class structure, and these changes in turn have crucially affected political
change.?(Skidmore and Smith, 42) Keeping this in mind, one applies this
background knowledge to the region of Latin America. Historically, the markets
and economies of Latin America have functioned with near absolute dependence on
the needs and conditions of foreign markets. Largely, this economic relationship
is referred to as dependency theory. This dependence was instilled from the
incipient colonization efforts of Spain and Portugal, which operated on the
monarchial duty of mercantilism; all efforts were done in honor of the mother
country alone. With the fall of colonialism and the onset of independent
government, two major transitions occurred. First, the newly independent
governments advanced peoples of European blood and descent into the majority of
political positions and a new upper class was established, ?Given these new
economic incentives, landowners and property owners were no longer content to
run subsistence operations on their haciendas; instead they sought opportunities
and maximized profits? (S+S, 45); this would later affect economics, politics
and society as a whole. Second, entry into a development period attempting a new
model of growth, focused primarily upon the creation and balance of imports and
exports. The outcomes of this period varied for different countries of Latin
America, mainly dependent upon the resources found inside their borders and the
desire of the outside world to invest within. Investment served as both the
promise and poison of this period. With the Industrial Revolution altering
production priorities around the world, less developed areas were sought to act
as a production center of natural and raw materials, ?Between 1870 and 1913
the value of Britain?s investments in Latin America went from 85 million
pounds sterling to 757 million pounds in 1913 ? an increase of almost ninefold
in four decades.? (S+S, 43) The importance of this transition is found in the
fact that investment in Latin America was made only to develop industry, which
produced raw materials necessary to fuel the industrial revolution in Europe and
the United States. The next phase of economic development was spurred primarily
by the Great Depression, and two World Wars. What both of these events
demonstrated was that if Latin America continued economic dependence to such an
extreme upon foreign markets then internal unrest would be felt by every
external, international unrest. For young markets and weak governments, such an
outlook could not be considered. Thus, a major economic trend developed under
the encompassing title of ? primary product import substitution,? which in
response to these realizations encouraged the creation and promotion of national
industry. To redirect market sectors toward the production of finished products,
not merely raw materials, as previously produced, ? By producing industrial as
well as agricultural and mineral goods, the Latin American economies would
become more integrated and self-sufficient. And, as a result, they would be less
vulnerable to the kinds of shocks brought on by the worldwide depression.? (S+S,
53) The final phase, following generalized periods of success and growth lead to
the inevitable realization that the world market was becoming exponentially
imbalanced. Impracticalities in the idea of Latin America becoming a world
trading partner of finished goods soon showed themselves as unemployment began
to rise from less demand on manual labor and wages failed to rise with prices on
the world market of more highly industrialized countries. Beyond wages however
was the more important loss of purchasing power from their goods, ?Over time,
the world market prices of Latin America?s principal exports underwent a
steady decline in purchasing power.? (S+S, 56) For the same amount of products
used in the past, less capital goods were being purchased. This marked the point
of entry for many countries into failing economies and debt. Governments, in
desperation, were at a point of decision, and the new answer came in the form
of, debt-lead growth and corporatism. Simultaneously, there was an international
trend of opening markets to practices of free trade. As governments
de-nationalized industry and took on increased loans from the IMF and World
Bank, inflation ensued throughout the economy, ?Between 1970 and 1980 Latin
America increased its external debt from $27 billion to $231 billion, with
annual debt-service payments (interest plus amortization) of $18 billion.? (S+S,
58) In exchange for debt relief, the IMF imposed restrictions on Latin American
economies, which were largely termed as ?structural adjustments.? These
practices were being followed at first, yet the initial periods of time proved
to burden primarily the lower classes and by-pass the elites, whose prosperity
was secured outside of the country?s direct economy. The long-term result of
economic reform has been the lowering of inflation, ?Excluding Brazil, average
inflation throughout the region dropped from 130 percent in 1989 to 14 percent
in 1994.? (S+S, 60) Brazil Brazil did not heed the advice of the IMF and did
not choose to undergo the stringent economic reforms of the 1970?s and 80?s.
Although the generalized trend was a lowering of deflation in the 1990?s,
Brazil fell short from that scenario and inflation soared. As reported by
Skidmore and Smith, the rate of inflation found in 1993 was 2490 percent
annually. In that same year a new finance minister was named, Fernando Cardoso,
with his title came a $122 billion foreign debt. (My Brazil) In 1994, a new
anti-inflation program was developed and this began to show results. Entitled,
the ?Real Plan,? its stringent economic reforms lead to improvements,
??consumer prices increased by 2% in 1998 compared to more than 1,000% in
1994.?(CIA World Fact Book) After initial improvements, Brazil became a victim
of the 1998 world economic crisis, which began in Asia, spread to Russia and
from there hit Brazil. Due to these pressures placed on the Brazilian currency,
interest rates were hiked 50%, and according to the CIA, investment fled the
country, ?Approximately $30 billion in capital left the country in August and
September.?(CIA World Fact Book) After receiving $41.5 billion in relief from
the IMF, Brazil entered a new phase of economic reform to incorporate both a
devaluation of the currency and a free floating exchange rate, ?On 13 January
1999, Central Bank officials announced a one-time 8% devaluation of the real,
and on 15 January 1999, the currency was declared to be freely floating.? The
immediate results from this are unable to be realized at such an early stage,
yet companies are leaving neighboring nations and heading for Brazil due to the
Brazilian devaluation, as reported in a recent ?Business Week? article, ?
The 35% slide of the Brazilian real against the Argentine peso is luring one
manufacturer after another north to Brazil.?(Business Week)The current
government under Cardoso can only speculate the outcome for now. Cuba Cuba has
served as a classic example of the problems and downfalls of a dependent market
system. The main commodity produced worldwide by Cuba is sugar, and being a
primary product, the price fluctuates internationally. Beyond traditional
factors that play into the economy of Cuba, one had remained fairly consistent
over the last two decades until 1992, when the collapse of the Soviet Union
ended any allied funding toward Cuba, ?By 1992 all Russian Economic and
military aid was gone. Oil shipments fell 86 percent from 1989 to 1992, while
food imports dropped 42 percent in almost the same period.? (S+S, 291). And,
as reported by the CIA, ?Havana announced in 1995 that GDP declined by 35%
during 1989-93, the result of lost Soviet aid and domestic inefficiencies.?
(CIA World Fact Book) This was the ultimate and shattering example of how too
much dependence upon any one market is unsound. This of course was only in
addition to the struggles endured from the US embargo already in place. Skidmore
and Smith goes on to report that in 1990, Cuba had a $6 billion debt. At the end
of the decade little improvement has been found, as in 1998 export earnings were
reported to have declined by 22%. (CIA World Fact Book). Most analysts speculate
that until Cuba is accepted into the capitalist West and expands from primary
products, the cycle will only continue to fail. Politics: An examination of
politics should logically follow economics, as the two are intrinsically
influential upon one another, as presented earlier. In considering economic
ramifications throughout Latin America, the prospects of colonialism begin such
a view. Latin America is an interesting case study due to the existence of
indigenous cultures in place throughout the region who were exploited by
European settlers and have attempted to culminate and blend as a single society
in the current day. The three primary civilizations of note, Mayan, Aztec, and
Incan, were each overcome by the conquistadors initially from both, Spain and
Portugal. Each region, being carved as a vice royalty to a distantly respective
monarchy, bowed to the pressures and duties of mercantilism. The colonies were
to serve the motherland and the motherland alone. The workings of the social
stratifications of Latin America begin as the European colonizers and indigenous
peoples develop a class society founded on the premise of dominance through
European ancestry. These class divisions were embodied in three separate
categorical races: peninsulares, whites born in Spain; criollos, whites born in
the new world; mestizos, the mixed Spanish and Indian blood race, and the few
indigenous peoples that survived the plague of disease brought on by the
Europeans. So began the complex social stratifications embodied within every
facet of culture and politics. With the defeat of the Spanish Armada,
symbolically the power of Spain was diminishing and thus, the ambitions of the
colonies were increasing. Charles III was the last in a succession of rulers,
which attempted to consolidate control over the colonies. This was attempted by
both re-designing the administrative system governing the colonies and allowing
free trade to occur from any of the ports to Spain, as contained in, the
?Declaration of Free Trade.? The unsatisfied colonies were finally forced to
loose allegiance to the crown when Napoleon removed King Ferdinand and placed
his brother upon the throne. Many see this as the fateful move, which lead to
colonial independence, ?Without Napoleon?s interevention the Spanish
American colonies might all have remained Spanish until well into the nineteenth
century, as did Cuba.?(S+S, 29) Napoleon?s action may not have caused the
rebellions alone, yet they served as an impetus for change. This change came all
too often tin the form of revolts and rebellions, yet slowly, the provinces
gained their independence and a new era of struggling to establish legitimacy
and stability in the established world order began. The economic troubles of
these early governments had begun before the leaders had even fully been
initiated into office and this economic frailty would follow these governments
for decades to come. The militant warfare and fighting of the nineteenth century
was due mainly to a combination of factors consisting of social stratifications
and economic inadequacies. These inadequacies lead to a period of military rule
throughout most of Latin America; some of this was phased in and out as others
forms official dictatorships, with an iron grip upon the people, Within a year
or so after the October 1929 stock market crash in New York, army officers had
sought or taken power in Argentina, Brazil, Chile, Peru, Guatemala, El Salvador,
and Honduras.? (S+S, 52). As economic troubles expanded, the role of the
military in government decreased, ?In this context of economic crisis, Latin
America turned way from authoritarianism ? and, in many cases, toward
democracy.? (S+S, 60) Generally the expanded middle class began demanding for
greater accountability within the government. This trend increased throughout
the twentieth century and today Latin America boasts an all time high in
democratically elected governments, with the continued exclusion of Cuba, and
this period of democracy may set the precedence for forms of government and
success in fulfilling the desires of a people. Argentina The governmental
situation within Argentina has been marked with considerable amounts of upheaval
and violence, even when gauged by Latin American norms. Within the decade of the
nineties much focus has been given to events in Argentina?s past, primarily
concerns, which focus upon the Dirty War. As President of the country, Menem had
begun a series of attempts to punish human rights offenses, which had occurred
prior to his tenure. This action prompted mass riots and several rebellions,
which posed serious threats and questions toward the legitimacy of government.
Menem ceded pardons and the issue gradually subsided, yet this serves to show
how actions and inactions of past regimes affect the governments of today. The