Latin America has long been integrated into the global economy, first exporting valuable goods like spices during colonization. In the 1800s, it exported commodities like wool, livestock, guano fertilizer, and nitrates. Brazil experienced rubber and coffee booms and busts in the late 1800s-early 1900s. The US expanded its influence through actions like the Monroe Doctrine and Spanish-American War, and established economic dominance in the 20th century. World Wars I and II disrupted trade but also opened new opportunities for Latin American exports to replace goods unavailable from other regions. Post-war, Latin American countries pursued import substitution industrialization behind protective trade barriers but faced debt crisis in the 1980s and shifted to more open

1. Chapter 4 Latin America and Globalization

2. Globalization Globalization: the process by which an increasing percentage of the world’s economy is traded across international boundaries, rather than being traded within a country’s boundary

3. Development of Export Economies Since colonization the Americas have been a part of the global economy Early globally traded products Because transportation was expensive only the most valuable projects were traded globally Remember Chris was looking for a short cut to the Spice Islands—spices were high value Sugar, gold, silver

4. Exports of the 1800s 1-Wool because although it is relatively low value it is not perishable so could be exported from Patagonia to Europe 2-Livestock exports Initially as live animals on ship decks 1900 UK bans the import of live beef due to hoof and mouth disease Development of refrigerated ocean going ships mean that frozen beef and mutton could be shipped from Pampas and Patagonia to Europe

5. Fertilizers-organic and inorganic Guano fertilizer is bird droppings Islands off of Peru—arid so droppings are not eroded away Excellent fertilizer Nitrate deposits from Atacama Desert Nitrates go bust due to synthetic nitrates Both guano and nitrates were low value but not perishable, could be exported due to large steam powered ships, without the invention of these larger ships and steam power it would not have been profitable to export these products Improvement in transportation opens up the possibility for other low value bulky commodities to be exported

6. Brazilian Rubber Boom Rubber trees grow naturally in the Amazon River Basin 1840 invention of vulcanization increases demand and use of rubber Late 1800s rubber plantations established in Asia that could produce cheaper than Brazil Brazil couldn’t do rubber plantations due to susceptibility to natural pests

7. Brazilian Coffee Boom and Bust Coffee introduces to Brazilian highlands NW of Sao Paulo early 1800s Labor intensive crop 1929 world coffee price reaches $0.25 lb. 1931 world coffee price drops to $0.07 lb. However, based on coffee Sao Paulo develops into Brazil’s most important manufacturing center and now largest city

8. THE US and Latin America Monroe Doctrine: 1823 the American continents, by the free and independent condition which they have assumed and maintain, are henceforth not to be considered as subjects for future colonization by any European powers. . 1890s-1900s the US exercises it’s muscle and expands its territory Spanish American War: Cuba, Puerto Rica, Dominican Republic, Philippines Panama Canal Zone US Virgin Islands purchased from Dutch 1917 Roosevelt Corollary (1904) to the Monroe Doctrine, the US will take responsibility to “supervise the internal affairs of countries of LA to insure US internal security. US establishes economic predominance in the region during the 20 th century

9. The Impact of WW I Altered trade relations, cutoff Germany Latin American commodities that had markets in Europe competed with US good Whet, beef, cotton End of the war world market’s glutted with surplus Weakening of the finance and trade system that had been focused on London Weaker trade between Argentina and UK because of weak UK markets

10. The Interwar Years Great Depression World trade shrinks by 60% from 1929-1932 Reemergence of Germany (Hitler) as a trading partner Improved living standards, rural-urban migration Many admired the expansionist geopolitical views of Germany

11. Impact of WW II War in the Pacific cuts US and UK off of raw materials from Southeast Asia Latin America steps in to provide some of the lost commodities Rubber, cinchona bark for quinine “ Forces” Latin America to trade exclusively with the USA LA becomes economically dependent on the US Markets, technology, financial services

12. Impact of WW II-b Development of small-scale industry to produce what could no longer be imported from USA or Europe Positive trade balances—exports exceed imports Significant migration of Mexican laborers to the USA Bracero program for farm workers

13. Government Control of Economies Fascination with fascism State directed industry, controlling imports and exports, public works, agricultural self-sufficiency Fascination with autarky Self sufficiency ISI—import substitution industrialization

14. ECLA Economic Commission for Latin America UN Commission, first executive secretary Raúl Prebish—offices in Santiago, Chile CEPAL (Comisión Económica para America Latina) http://www.eclac.cl Latin America must industrialize How do you catch up? Impose protective tariffs to protect infant industries Slowly reduce tariffs Reduction in tariffs didn’t happen Result as high-cost low-quality industrialization

15. Post WW II Latin America disappointed not to be included in the Marshall Plan Exports of primary products increases Slow increase in demand for non-essential food exports as European economies recover Bananas and fruit

16. Latin American Manufacturing ISI important until 1980s Steel industries, aluminum at Ciudad Guayana, automobile assembly Chile—plant in Antofagasta Brazil-FTEZ Manaus Consumer goods, textiles, footwear, radios, TVs Expensive and poor quality

17. Postwar Trade Patterns Attempts to establish trade association within the region not particularly successful Creation of the European Union means reduces market access due to high subsidization of European farmers and preference for tropical imports from former colonies

18. Alliance for Progress US fears a rise of communism in Latin America, late 1950s early 1960s Cuba 1959 Alliance for Progress 1961 Promote democracy, accelerate development, sponsor agrarian reform, improve housing, working conditions, education, public health “ The Alliance for Progress had little impact on any of the problems” (117)

19. Why didn’t it work “ The countries of Latin America were not ready to cooperation and implement the region-wide goals of the plan” (117) “ most of the aid helped to support the old regimes rather than promote democracy and progress” “ Few countries tackled the issue of agricultural reform” David the cynic: the goal was to protect US corporate business interests, not promote democracy and progress.

20. The 1960s Land reform is a political, economic, social, and emotional issue Need to reform the hacienda system Latifundai versus minifundia Land reform also requires other changes, can’t just “give” people land and expect things to improve Roads, credit, agricultural extension services,

21. Explosive urbanization 1960s High rates of population growth High rates of rural-urban migration Limited abilities to provide urban infrastructure leads to sprawling shanty towns Explosive growth of the informal economy

22. 1980s Lost Decade Debt problems in all countries stemming from the borrowing boom of the 1970s Terms of trade worsening Prices of export commodities fall Prices of imported manufacturing products rises Per capita incomes decline

23. Lower Trade Barriers How to fix the problems of the 70s & 80s? Neo-liberalism: increased trade, open markets, eliminate inefficient state owned enterprises Deregulation and privatization Maquiladoras Mexico joins NAFTA, no help from Europe and so strike the ‘best’ deal possible with the devil Mexico so far from heaven, so close to the United States

24. Runaway World Somewhat surprisingly the USA now runs a trade deficit with Latin America We import more than we export Have the economic tables been turned? Is the USA now dependent on Latin America? Latin Americas exports have come at a price Weak workplace legislation, low wages, lax workplace safety, use of chemicals in agricultural production that endangers the lives of the workers Benefits from the trade imbalance largely benefit those who are already wealthy, rather than improving living standards for the majority