Economic indicators

Whereas the period extending from the Wars of Independence to the 1870s was one of stagnation in nearly all the countries of the region, in the century that followed, the Latin American economies underwent relatively intense development, although the pattern varied from country to country. In the first half of the century - during which development was induced largely through the expansion of raw material exports-the regions with temperate climates and abundant empty lands received a large inflow of immigrants and capital from Europe. In these regions, economic development was particularly intense during this first phase and was accompanied by a precocious urbanisation process and other social changes. The essentially rural old society, in which political power was monopolised by a small minority of landowners, was rapidly transformed as large urban centres came into being, with the growing participation of the middle social strata. The southern region of the South American continent - Argentina, Uruguay and, to a lesser extent, Chile and the southern areas of Brazil - which had received an influx of European immigrants, became rapidly urbanised and the agricultural economy became entirely monetarised. An elastic food supply and the relatively high wage rates demanded by the European immigrants contributed to the establishment of much higher living standards than those prevailing in the areas settled much earlier.

Today, the living conditions of the Latin American population as a whole are basically an outcome of the social structures that emerged during their first phase of modern development – from about 1870 to 1914 – and of the intensity of this development from that period up to the present time.

Roots of the agrarian movements

The economic planning experiments carried out in the Latin American countries, despite their modest aims, served to pinpoint the major obstacles hampering the region's development. By establishing targets and identifying the agents on whose decisions their attainment depended, the development planners initiated discussion of the motives guiding these agents and the means that would have to be mobilised in order to intervene in the behaviour of the policy-makers. It soon became apparent that projecting the expansion of an economic system simply by means of extrapolating rates of growth was limited in scope, and that planning based on the traditional behaviour patterns of the agents involved could not guarantee the attainment of even modest targets. What we needed was a study in depth of the structural elements delimiting the range of options open to the decision-making agents so that the factors hindering the development process could be properly identified. Thus the framework of analysis was imperceptibly broadened as the relevant agents were gradually more clearly identified and observed in their own context. Greater knowledge of the real structures was gradually built up and in many cases this involved going beyond the conventional framework of economic analysis.

The structuralist approach to the development process tended to stress the importance of agrarian problems which, until quite recently, had earned scant attention from economists whose interest had been focused on the study of industrialisation.

Large estates and social organisation

In Latin America, agrarian structures are not only an element of the production system but also the basic feature of the entire social organisation. We have seen, in chapter 2, that both in the economies whose point of departure was export agriculture and in those initially organised around mining production, the large estate tended to become the basic element of social organisation. From the outset, the principle governing grants of land was that grantees should have the necessary means to exploit their lands in order to produce a surplus which could be converted into cash and partially transferred to the Crown. After independence, several countries sought to modify this principle by promoting colonization schemes under which lands were granted as family holdings to settler families who undertook to work the land themselves. This policy was nearly always bound up with the encouragement of European immigration and achieved some success in Southern Brazil, Argentina and Chile.

The family farm system made headway in regions which remained relatively isolated and were characterised by the prevalence of recent settlement of European origin. Thus, in the southern regions of Brazil, where there was no profitable export crop, the pioneer European ‘colonies’ were forced to turn to a subsistence economy, producing marginal surpluses for sale in the home market, particularly in the rapidly expanding coffee areas. Given the abundance of land and the farming techniques which settlers brought from Europe.

Diversity in behaviour patterns

A comparative analysis of overall development trends in the post-war period reveals wide differences in the stages at which the Latin American countries find themselves, and at the same time makes it possible to establish the broad outline of a representative model for the regional economy. For the purpose of this analysis we have used data covering the period starting in 1950 for the countries of greatest relative economic importance in the region: Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. All these countries have experienced significant structural economic change during the period under review, as can be seen from the figures given in Tables 13.1 and 13.2. In all of them, the agricultural sector's share in the gross domestic product has decreased: between 1950 and 1970 it declined from 18.7 to 13.8 per cent in Argentina; from 22.5 to 12.2 per cent in Mexico; from 39.8 to 29.7 per cent in Colombia and from 27.4 to 19.1 per cent in Peru. By contrast, manufacturing increased considerably in every one of these countries. In Brazil, the share of the manufacturing sector in GDP was slightly over half that of the agricultural sector in 1950; two decades later it was 36 per cent more than that of agriculture. In Argentina the share of manufacturing in GDP is two and a half times that of agriculture and in Mexico it is nearly double the figure for agriculture.