The origins of economic instability in Latin America

“Latin America is the region of open veins…Our defeat was always implicit in the victory of others; our wealth has always generated our poverty by nourishing the prosperity of others—the empires and their native overseers. In the colonial and neo-colonial alchemy, gold changes into scrap metal and food into poison.” — Eduardo Galeano, Open Veins of Latin America

The exploitation of Latin America during European colonisation set the region along a path of economic instability and underdevelopment. In the book Open Veins of Latin America (Las Venas Abiertas de América Latina), the late Uruguayan leftist writer Eduardo Galeano blamed European colonisation—and later American neo-colonisation—for the destruction of Latin American society and economy. Economic instability in Latin America is a paradox. According to Galeano, the wealth of the land in Latin America is the cause of poverty in the region. Exploitation of Latin American minerals and resources by European colonisers built the foundation for today’s economic woes in the region.

Independence from Iberia did not break the chains of colonialism in Latin America. Newly independent countries inherited depleted soils from mass mineral extraction which Brazilian economist and intellectual Celso Furtado attributes to European colonisation. The process of independence in Latin America saw the creation of weak political institutions plagued by macroeconomic challenges such as fiscal fragmentation, high tariffs and a cycle of debt and inflation, birthing the region’s narrative of economic insecurity and underdevelopment.

Furtado, C. (1976). Economic development of Latin America: Historical background and contemporary problems. Cambridge: Cambridge University Press.

Galeano, E. (1997). Open veins of Latin America: Five centuries of the pillage of a continent (25th anniversary ed.). (C. Belfrage, Trans.) New York, NY: Monthly Review Press.

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