Chapter 4.5, Problem 1RQ

To determine

The way in which the export of primary products shaped the economics of Latin America.

Answer to Problem 1RQ

Dating to the colonial period, in history, Latin American economies have been led by the export of primary products. After independence, neocolonial relations between Latin American governments and both the United States and European states sustained this pattern. More lately, the significance of export-led industries in the primary sector remains to be accentuated through the formation of trade blocs, such as NAFTA. Such a reliance on the export of primary products upholds Latin America in a predominantly susceptible position with regard to the global economy fluctuations.

Explanation of Solution

The copious natural resources of Latin America were its wealth historically. During the colonial period, gold, silver and sugar created considerable wealth for the colonists. After independence in the nineteenth century, a sequence of export explosions presented commodities, such as coffee, bananas, grains, cocoa, rubber, tin, petroleum, copper and wool to a growing world market. A bequest of this export-led growth was the development of a trend to focus on one or two major commodities, which were a pattern that continued into the $1950\text{s}$.

The trend in Latin America since $1960\text{s}$ has been the mechanization and diversification of agriculture. The agricultural sector was turning out to be more capital-intensive that in turn led to displacement of land and rural to urban migration. For many countries, mining of gold, copper and bauxite remained as the economic backbone. Logging is also a significant economic activity. In the oil-rich countries including Mexico, Ecuador, Venezuela and Brazil, production of petroleum and natural gas increased. Brazil is significant for the biofuels with its ethanol powered automobiles.

Most Latin American governments have incorporated neoliberal strategies as an effort to bring economic development. Consequently, exports have increased, along with direct foreign investment in the region. Though the region had growth between $2000$ and $2010$, there is still obstinately clear income disparity. The reliance on the primary products export sustains Latin America in a primarily vulnerable position concerning the global economy fluctuations.