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Why Do We Keep Repeating the History That Does not Allow Latin America to Become an Economic Power?

Historically, Latin America has been considered, like Africa and Southeast Asia, as a continent “full of resources” both natural (forests, water potential, mining, agriculture, tourism potential) and human, but unlike a good part of south-eastern Asia, has not managed to “take off” as an economic power, except for very specific cases, more related to individualities than to countries or to the continental collective.

And much less has it succeeded after the contingency created since the end of February 2022, when Russia invaded its neighbour and former co-member of the Union of Soviet Socialist Republics, Ukraine, causing difficulties in the distribution of gas and food to Europe, both due to the cuts in the distribution of the invaded country and the sanctions that the democratic world applied to the invading country and vice versa. 

The key question is, why is it that Latin America does not take advantage of this juncture, as in other historical opportunities in which “economically developed” countries have turned their gaze to this side of the world, to develop and become an “economic power” with a strong voice in the global context?

It seems to be a historical process to which Latin American countries have adapted since colonial times and from which very few have managed to escape (for very little, it must be said), and it is to depend on a “metropolis” to which they send their raw materials and in exchange for these they receive the finished products necessary for their functioning, having to pay for these goods in turn.

Because of this, the economic balance of Latin American countries is always affected, since the value they can give to their raw materials, in addition to being compromised by market demands (as happens, for example, with the Venezuelan oil basket, which is usually quoted 10 to 15% below the crude benchmarks of Texas or the North Sea), must face the costs of finished products, along with inconsistent government policies or in some cases at odds with the complex economic articulation given by globalization and new global commercial trends.

That is why the countries of the region need to establish a set of policies, both economic, tax and social, that boost their productivity and break with a tradition that, as mentioned, has made the region not active commercially and is only attractive for the ability to offer raw materials at a relatively low cost. 

In that sense, one of the strategies that Latin American governments should apply to boost their respective economies and project each country, according to the International Monetary Fund (IMF), includes decreeing reforms to increase productivity and competition both internally and with its neighbours, taking advantage of existing potentialities and encouraging the manufacture of processed goods instead of marketing the raw material to reacquire it as a finished product.

Another of the strategies proposed by the IMF is based on improving education, promoting professional and technical careers according to these mentioned potentialities, and that serve as a “source of inspiration” to develop manufacturing industries of finished products from the raw material produced in the country.

The IMF also suggests changing the countries’ tax systems, in order to encourage the establishment of these manufacturing industries, the strengthening of high-capacity means of transport (land, air and water) and the attraction of foreign capital to help finance these projects without the fear of controversial government decisions or disconnected from the reality that seeks to create.

Finally, the IMF proposes to reduce inequality between the so-called “social classes,” which could be achieved through the previous strategies: by incentivizing and financing education through a healthy tax system, the “less privileged” social groups can shorten the social gap with those considered “better positioned.” But this must be done consciously and consistently, without royalties or bonuses that only feed the “pity culture” and a “forced inclusion” in an economy still sick from the political point of view.

When these IMF recommendations are compared with the economic reality of each country in Latin America, only some vestiges of application are observed in Chile, Argentina, Brazil, Colombia and Mexico, although the volatility of public policies due to the ideological alternation between contrasting visions eliminates the constancy they require to establish themselves within the social and productive collective of these countries, which is reflected in social conflicts that are generated with each presidential change, great discrepancies between social and geographical groups, and an economy that, although stable, remains without taking off as it is expected to do.

In the case of the other countries of the region, the presence with the greater or lesser influence of a political ideology that criticizes and even rejects the IMF recommendations works as a “breeding ground” so that errors in economic policies, difficulties in professional education, misguided tax policies and the “culture of pity,” in addition to rampant corruption at all levels of government, both economically and attitudinally, serve to keep in force the premise with which this article began: Latin America has the resources to become an economic power, but there is no real intention to make that happen, due to ideological and even cultural conveniences that prevent a change of mentality at all levels, mainly in the political and social.

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