The Current State Of Devlopment In Latin America

The Current State Of Devlopment In Latin America 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.

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(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 todays 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 Britains 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 Americas 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 countrys 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 1970s and 80s. Although the generalized trend was a lowering of deflation in the 1990s, 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 …