Question

Why did industrialization not develop in Latin America?

Answer 1

Latin America is abundant in natural resources. But it still remains much poorer than its neighbors. We can attribute many reasons to it. The first being its Geography. More than 70% of Latin America is in the tropics. There are more diseases compared to other parts- such as malaria, yellow fever, dengue, cholera etc.

Another reason is that, in Latin america Civil law tradition is more prevalent. A common law system give more powers to judges. Common law system is more apt for economic growth and development. This put Latin America far behind others.

Institutional legacy plays an important role in shaping a country's economic performance. In Latin America institutional arrangements are weaker. The Ethno- Linguistic and cultural fragmentation is also a major reason for its lagging behind.

Another important reason is its protectionism. Latin america developed import substitution industrialization, which aims at protecting industries outside competition to be industrialized. These protected industries did not show sufficient growth and Latin america went into debt crisis. It did not have a stable macroeconomic environment . The predominance of oligarchical groups is another reason for its slow economic growth. Another reason was the inefficient tax system and the increasing public sector budgets. This combination reduced the Government's ability to provide efficient social services. Public finance structure became very weak and inflationary financing was forced in order to reduce the gap between the governments expenditures and revenues.Because of inward -looking strategy, exports were greatly discouraged. All these reasons attributed to the failure in Latin America.