Unit 3 AT04: Structures Endowments and Institutions in the Economic History of LAtin America (Coatsworth) Flashcards

Question

What was the economic growth trend in Latin America during the half-century following the independence wars?

Answer 1

Little to no economic growth occurred, with some areas like Argentina and Chile beginning growth earlier than others.

Answer 2

In the late 19th or early 20th century.

Answer 3

An approach focused on the connections between social stratification, political power, and economic strategy, emphasizing the impact of structures and institutions on development.

Answer 4

Latin America continues to face economic stagnation and inequality, making structuralists' insights relevant once again.

Answer 5

High levels of tariff protection and non-tariff barriers to foster domestic industries and reduce reliance on imports.

Answer 6

While it initially led to some industrial growth, ISI ultimately faced limitations and underperformed overall.

Answer 7

The view has shifted to suggest that countries open to trade and capital flows tend to experience faster GDP growth.

Answer 8

* Slowed improvements in living standards * Persistently high poverty rates

Answer 9

It argues that factor endowments in colonial Latin America led to wealth concentration and institutions favoring elites, hindering broad-based market participation.

Answer 10

Significant GDP per capita divergence across Spanish colonies and the argument that land ownership was not necessarily more concentrated in Latin America than in British colonies.

Answer 11

Legacy of Old World policies adapted to New World conditions and the concept of 'crony capitalism' or 'vertical political integration' (VPI).

Answer 12

Disappointing economic performance post-Washington Consensus, potential exhaustion of the late 19th-century political economy model, and risks associated with political and economic experimentation.

Answer 13

A set of ten free-market economic policy recommendations associated with the IMF and the World Bank.

Answer 14

It describes a system where politically connected elites and government create mutually beneficial deals, fostering economic growth despite political instability.

Answer 15

[Dependentista]

Answer 16

The idea that past events and decisions can have a lasting influence on future outcomes.

Answer 17

The system of large landholdings concentrated in the hands of a few owners, seen as a structural obstacle to agricultural development.

Answer 18

Activities undertaken to increase one's share of existing wealth without creating new wealth.

Answer 19

* cocnern of external factors influencing internal dynamics (class formation, political coalition and resulting institutions) * Coatsworth pushes back on engerman: within spanish empire, huge variations in GDP per capita between colonies in 1800. Undermines institutions as sole proprietor. Cuba was the highest GDP per capita. Also challenges premise of land concentration - sig. indegeonous land owning in andes and low value of frontier land in argentina. Overall, reads that inequality and GDP per capita psotively linked in spanish. * Coatsowrth puts more emphasis on policies and practices imported by spanish; slavery, caste system and colonial elites. Elite wasn’t absolute, crown put limits such as preventing slavery after 1540s and protecting indigenous land. * Coatsworth; globalisation provided opportunity for modernisation and elite consolidation. Elite dominated growth was enabled through export growth model; dias integrated mexico with a booming US market through railways. Revisit structuralist texts with this. *

Answer 20

While described as a form of crony capitalism, the sources indicate this system produced economic growth2 . Under the Porfiriato, Mexico's GDP per capita likely returned to late colonial levels by the early part of the era and saw substantial increases, for example, from an estimated $674 or $642 in 1870 to $1,366 or $1,435 in 19005 1800, Cuba had a per capita income of $90 (in 1990 international dollars). Cuba, a slave colony with likely high inequality, had the highest income. Furthermore, the source argues that landownership (and wealth more generally) was not more concentrated in Latin America than in the thirteen British colonies. Mechanisms and Examples: The VPI model is seen as illuminating how self-interested deal making led to credible commitments against expropriation, encouraging capitalist investment. The creation of Banamex in the 1880s is cited as a case of insider deal making where the government gained revenue in exchange for granting privileges that couldn't be easily revoked However, the sources also note that the Díaz government used institutions like banks as part of a strategy for monetary, fiscal, and development objectives, suggesting the regime was not merely predatory but sometimes farsighted

Answer 21

Growth and Development are not the same and have a weak relationship. Development encompasses broad factors such as freedom, longevity and education. conclusive findings: * Public policies played a crucial role in the improvement of health and education * Socialist experiences failed to sustain momentum and limited agency and freedom * Education and health played a huge role in catching up Differences in institutional form in Britain and US come from different circumstances and challenges the view that it was Britian's rigid institutions. Proposition that industrial planning by enterprise, financial institutions and the state has become increasingly important for competitiveness and growth its not established.

Answer 22

* HDHI, increases of same absolute size represent greater achievements the higher the level they take place * improvement of health (med tech) and education --> LR gains in human development * Social indicators have asymptotic limits * Trends in human dev. dont closeley mathc gdp per capita trends * Socialist countries restrict indv. choice --> only progress in basic needs * LR gains in dev. by progress of social dimensions, longevity and education. When reach asymptotes and income becomes main dimension.

Answer 23

* Phases of globalisation dramatically improve GDP/capita but not on human development * Laissez-fair capitalism saw human development falling short of the economic advancement from globalisation and indsutrilisation * Nevertheless, long run upward trend in world human development is observed for both the UNDP indices ('hybrid' and 'old HDI) * Since 1950, advancement in human development has been hand-in-hand with economic growth * Rest reached human development of OECD in 150, by 2007. in 2007 real GDP per capita of Rest was similar to OECD by 1938

Answer 24

* Alternative measures creates new insights including: 1) Substantial gains and much more intense in world human development are observed since 1870 and from 1913-70 2) Major advance from 1920-50 during economic globalisation backlash, due to education and longevity gains 3) Incomplete catching up by the rest from 1913-70 Variance in rests performance sinc 1) Up to 1913; steady and moderate progress 2) 1913-70; acceleration (apart from WWI) 3) 1970-90; sustained deceleration gave way to an expansion from 1990

Answer 25

* Based on Gerschenkron's theory of substitutions for prerequisites and the workings of Oliver Williamson analysis of hierarchical arrangements. * This all suggests that Britain's delayed adoption of mass production was because this organisation was inappropriate to British conditions. * Thus the state was not the critical factor.

Answer 26

each country's position within a typology of economic backwardness required a substitution of the leader's prerequisites, creating endogenous institutional differences among national industrialisations. Even predicted that increasingly powerful industrialisation spurts in economies whose growth started late. Believed substutitive couldn't cancel the intial disadvantages and inappropiate for more advanced economies.

Answer 27

* Britain industrilised witth markets, other substituted with hierachies leading to larger firms (Germany and US) better in LR. British atomistic industry inhibited rationalised * Not to do with simply institutions, diff came from diff obj circumstances e.g. British fail to adopt mass and heirachical due to adv econmy and lack of raw material supply * Inherent superiority of large hierarichal organisations, only adopted under favourable costs and marketing. Couldn't be overcome by industrial planning (Elbaum)

Answer 28

British financial institutions didn't finance best industries like germans. BUT it was due to Britians sophisitcated arbitrage markets that made german banks inefficient. Firms in britain still found financing easy. British historical legacy, led to rigid institutions and excessive fragmentation. BUT monopoly wouldn't have installed new capital.

Answer 29

* In certain environments hierarchical organisations or firms have transaction cost advantages that encourage IB. Iron and steels brought the best plants to Germany and then to Russia Markets inferior when coordination breaks down in the possibility of transaction specific assets bejng opportunistically exploited American factors of raw materials, immigrant labour supply and mass cheap products —> favouring mass production and hierarchical (50% of labour force immigrants in 1917)

Answer 30

* Differences in productivity levels create a strong potential for convergence of levels, depending on SOCIAL CAPABILITY * Pace of realisation is dependent on conditions that influence the diffusion of knowledge, mobility of resources and the rate of investment * Rising social and political effects of rising wealth can itself weaken social capability * Attractions of goals other than growth increase as wealth increase.

Answer 31

* Tech backlog used by followers to catch up with greater gains * Backwardness comes from flatering social capability, countries can mold insts. to fit adaptability * Unequal abilities to pursue paths that are resource biased or scale dep * Leaders can outcompete followers attract their labour, followers can retard leaders growth (US + UK), UE as leaders lose markets. * Welfare state is a mode of conflict resolution to mitigate the costs of change that could induce resistance to growth.

Answer 32

What made the US a leader?: 1) Technological change favoured large-scale production such as in the US 2) Leader in social capability WWI serious setback for many countries, but stimulus for US

Answer 33

* Variance among productivity levels of 'follower' countries decline drastically over the century, from coefficient of 0.5 in 1870 --> 0.15 in 1979. This was continuous and had only one reversal. * Inverse rank correlation between the intial productivity levels in 1870 and susbeqent growth rates, reaching the correlation coefficient of -0.97 * Post ww2, enlarged social competence and greater experience with large scale production/finance to catch up - Post ww2 saw a chance for political reconstruction. * Rise of British cotton textiles ruined the Irish linen industry and attracted the Irish young men. Verdoon effect points to vulnerability of old industriest to progressive intl. industry.

Answer 34

The Rapid Economic Development in Latin America in the Belle Epoque (the 19th Century) was primarily **supported by foreign capital flows** that could support the burdens of population growth + immigration on the large savings gap compared to other export led countries like Australia.

Answer 35

* Potent immigration flows to Argentina --> higher dep. rates --> demographic burden depresses saavings --> increases savings gap --> inhibits capitaal deeping, formation and retards economic growth (+ **vulnerable to economic shocks**) * Argentina a late starter - longer for demographic transisition due to later developmental process. vulnerable to economic shocks associated with the Great War than other settler economies. Prior to Great War, Argentina relied on Britian as the banker to the world to make up its saving gap. --> Broke Britain in War --> Argentina lost capital flows to fill large savings gap --> never catch up w Australia

Answer 36

Migration contributed to nearly half of the net increase in population - wage premiium over 100% 1890-1939 comp. to Italy + Spaian Argentina heavily relied on foreign capital with foreigners owning 48% of its capital stock in 1913 compared to Australia's 20% Prior to the war capital intensity at a rate of 1.4% per annum from 1900-13 (capital deepening) --> after the war Argentina capital widening 0.6% per annum from 1913-1939 Argentina had a savings rate of 5% whereas Australia and Canada had around 15% A hueristic link between the savings rate gap and depnedncy shows that Argentina had a dep. 5% higher than the Australia-Canada avg. + savings rate of 11% lower 2/3 of the slow down of the Argentinian economy would have been eliminated if they had a higher savings rate --> sustaining capital deepening as the accumulation rate would've fallen to 4% which is above the populationr ate of 2.8%

Answer 37

Postcolonial shocks explain the different inequality trajectories in Latin America. Intial conditions only mattered little

Answer 38

Higher population --> more inequality Better terms of trade ---> more inequality External market conditions paired with particular factor endowments were decisive for inequality. Migration and annexation of land led to sizeable fluctuations. As countries increased their participation in world trade, the income distribution responded to changes in the country terms of trade The **rise in inequality** in Argentina and Urruguay is explained by the impact of **favourable terms of trade** and **international migration**. **Decline in inequality** in Mexico and Venezuela, explained by the imapct of **decreasing terms of trade** amplified by the **expansion of avaliable arable land**

Answer 39

Consistent with Uruguay rent-wage ratio measure of inequaltiy rises from around 1 in 1850 to 6 by 1900. By 1880 one of 3 inhabitants of the country was foreign * Livestock by products accounted for almost 90% of total exports in Uruguay * Total exports increased seven-fold from the late 1860s until 1913 * IN argentina exports shifted from silver to animal with 98.6% of exports being of animal origin by the mid 19th century Argentina inequality ratio reached near 12 in the 1850s compared to 3 in 1830 * If terms of trade decline, inequality wouldve been 41.5% lower When there is no migration inequality would've decline only 34.7%

Answer 40

* Key differences in LA and EAsia was that interventions in EAsia were not price distorting and left incentives intact. * Latin American conditions seemed to reflect a desire to insulate domestic from market forces. * Poor performers '*confused support for industrialisation with support for industrialists*' and created distortions that raised capital prices and reduced quantities invested for the long run. * * East Asian miracles (Krugman) was epitomised from mustering impressively high investment rates and experiencing dramatic capital deepening * Institutional structure of America took the region down a low investment path in much of the postwar period.

Answer 41

* Capital accumulation most imp. for LA growth, hindered by distrotions created by ISI * Structuralist school w micromanegment, regulatory appartus and variiegated nominal protection created even more intermediate price twists. * Great Depression exp encouraged ISI --> retreat from global economy --> LA share of trade secular decline * Combined with distortions, led to retardation and divvergence * Political conditions in the Asia-Pacific Region differed from America which had popular enfranchisement of competition interest groups lobbying for protection. Openness in Asia led to low black market premia, low tariffs, small capital price distortions and exchange rate stability. Latin America opposite, high black market premia (26%) tariffs (22%) capital price distortions (27%) and rates of depreciation (37% per annum).

Answer 42

* Tariffs averaged over 100% were the norm by the end of the 1950s Brazil 1966 nominal 154% tariff on consumer durables that was effectively 285% * Asia pacific group reached 3.4% growth. Latin have 0.6% growth, five times slower. Policies that supress openness - reduce growth 2% Relative price of capital associated with presence of distortions at various points in the economy about 1/4 of any tariff-rate changes passes through into capital price. Latin America grow 1.5% slower due to the lower investment rates

Answer 43

Immensely important, developed under late development constraints. Crucially, infant industry needed a well integrated export strategy East Asian model policies: 1. Pro-investment rather than anti-inflation 2. Control on luxury consumption 3. Strict control on FDI 4. Integrated pursuit of infant-industry and export-promotion 5. Use of exports to exploit scale economy 6. Productivity orientated view of competition Troubles in some East ASian countries come from departures from the tradional models.

Answer 44

* Cultural arguments attribute recent phenomena to millenium old causes * Maintaing high investment at the cost of moderate inflation * Maintained strict capital control (lack of FDI reliance) * Banning of importing luxury products --> national community and low expenditure * Export integrated infant industry * Create oligopolistic structure --> domestic firm to world class capacity, maximising EoS to then open up. (productivity>competition) * Regulated TNC investment

Answer 45

* Inflation Korea 17.4% in 1960s * Death sentences in Korea for major capital flight - during 1980s debt crisis none. * Korea & Japan had 2 lowest number of cars per capita comp. to any other developing country * Helped by undervalued currency for export success vs over-valued LAmerica * Korea no anti-trust until 1981, allowed collusive behaviour in 'promising industries' * TNC technology had to be screened and check for royalties or obsolete nature * Promotion of R&D in targeted areas

Answer 46

Need export promotion strategy, emphasis by Prebisch Ignored for political reasons Development of industry w exports to acque cash to buy new tech. Stable supply of FX + tech allows for innovation.

Answer 47

1. Organising mergers and market segmentation 2. SUbsidisng capital equiment 3. Subsidising R&D/training.

Answer 48

Stablle incentive system + gov. focus on exports --> lower labour and capital regulation and bureaucratic control -->Lack of discminiation against exports --> rapid export growth in Far Eastern NICs

Answer 49

* fastest rates of export expansion --> fastest GDP growth --> inc capital:output --> highest savings rate * Growth of TFP +ve correlation w export expansion, -ve correlation with ISI * Choice of EAsia to export nondurable consumer goods while LAmerica focused on producing consumer durables which requires sophisticaed industry and a large domestic market (higher costs and tariffs) * EAsian Gov provided a modern infra, stable incentives and gov. bureaucracy that helps exports

Answer 50

* Korea share in nonfuel exports of the 12 counttries 0.9% to 17.3% (1963-84) while India's fell. * 1960 period Japanse TFP growth 4.5% compared to Argentinian 0.7% * Korean savings rate 32.5% 1973-84 * Barzilian market for manufactured goods was 1/6 of Germany's. * 1970 President park of Korea compelled investmetns in heavy engineering and chemicals --> 5% decline in GDP. * Public expenditure as a % of GDP is 4% in Korea vs 26% in Mexico

Answer 51

Tillys war - tax relationship doesnt hold in LA LA financed wars through loans, commodity sales and custom duties NEw states lacked muscle to collect tax Central Gov failed to have a rs with parts of soceity that would support tax like with English Fuedalism

Answer 52

British observer 'Peruvians treated Guano boom as if it would last forever; spending wildly and removing other taxes' Ecuador didn't develop double entry book keeping until mid 19th century Brazil ahd sig. opposition to census and elected official avoided fazenderio (area of large alndholders) Mexico Lorenzo Zavala overthrown for trying to put a direct tax

Answer 53

Formation hinged on: 1. Economic Geography; physical terrain, avaliable resources, 2. Political geography; helped or hindered political control 3. Economic and Fiscal strength; reveneu generating capacity 4. Acceptance of political systems by public 5. Civil control of military 6. Role of church (political or ally) 7. Relative vulnerability of national to external power and attacks

Answer 54

Economic Geography; unified in central valley. Long coastline for trade. Rich in resources. Invested in infastructure (Santiago to Velporaizo in 1853 railway) Political and Fiscal; unified political space. Fiscally strong from metal exports (half of gov. revenues), top per capita exporters, fiscally able to make state. Also constitution of 1840; powerful centralised president to maintain order and stability. Liberals still kept similat structure, lasted constitution till 1925 Military and Church: military under control. Civic guard prevented coups. Won war against peru in late 1830s. Church avoided state conflicts unlike in Mexico and Columbia But limited reach in south and west. Centralised gov --> resource wealth --> funds state apparatus Exports --> wealth --> powerful state

Answer 55

Economic Geography: Independence broke colonial ties to silver mines to upper Peru. Buenos Aires focused on salted beef, hides, wool. Buenos Aires and provinces diverged as interior provinces suffered from no silver trade. Buenos Aires monopolised that trade and port; wouldn't trade wealth. Political and Fiscal: Huge political imbalance between buenos Aires and interior provinces. Hindered national unity and fiscal integration; Buenos Aires disproportionate power. Juan Mandel de Rosas governor of Buenos Aires 1835-52; opposed national constitution, delay in consolidating national state. Created well funded military for Buenos Aires, stability limited to Buenos. Colonial trade disruption --> Buenos Aires Economic Dominance--> reluctance to unity --> delayed national unity Refusal of bueons aires to ratify 1853 constitution. Shift. Uruguary and brazil overthrow rosas.

Answer 56

Geography: Bad Andes terrain --> huge transport cost --> weakened unity and central gov. authority Political: Made it hard for Bogata to rule, esp as british imports undercut local produce. Gold exports but didn’t make much money for state --> state short on cash and relied on bad taxes Liberal and Conservative church split similar to Mexico from the attempt of centralised constitution by Bolivar in 1820s Military wasn't predatory or interventionist. Civil Wars mainly with Church (1876 Civil War over education) Profound persistence of the terrain.

Answer 57

US colonies in 1700; tradition of local say in governance, clearer property rights, experience with representative assemblies --> formed federal structure with checks and balances for credible commitments Limit rent seeking - manipulating political system for advantages Spanish Colonies: centralised extractive colonial systems; less secure property rights, unsmooth transition, serious instability and strongmen with no consistent credible commitments. Arg 3: secure political order allowed for economic growth.

Answer 58

Lost Decades of Post-Indepence (1820s - 70s): lack of clear borders and huge military spending (77% of budgets). 1. Caudillismo (strongman rule) 2. Capital Flight 3. Fragmentation - Bulk Spanish colonies broke up into countries, hindering EoS and productivity. - Protectionism became the norm; LA had highest tariffs globally. LA no social group pushing for growth, wars weakened emerging buisness class. Stalemate. LA 1860s; liberals won. Decisive break, land reforms, church and state separation, breaking state monopolies. Achieving political stability through compromising with economci groups. Modern legal codes, reform, banking codes, tariffs. Growth followed 1.8% from 1870 - 1913. Fuelled by FDI. But came with exclusion of indigenous and poor; lacking universal suffrage.

Answer 59

Huntington (1968), over 70 coups occurred between 1820–1920 in Latin America. LAPOP (Latin American Public Opinion Project) data shows that countries with 19th-century caudillo legacies (e.g., Venezuela, Paraguay) have lower trust in political parties and higher support for military intervention even today LA had 0 capita growth from 1820 -70. Wages rose more sloly than GDP per capita in 1870s growth

Answer 60

Comparing LA to other global companies builds case of idea of lost decades not being so true. Implied average annual growth rate of 0.5% from 1820 - 1870. ; not really a lost decade. Chile , Uruguary acc compared well to US growth. But comparison is unfair due to different economic places. Should compare to other similar places. Kept pace with european periphery, faster than asia and africa

Answer 61

Consistently high tariffs for whole century Initially from need for cash then for Belle Epoque maintained then argued it was a retaliatory measure and then deliberate ISI Low colonial tariffs --> independence --> weak administration and wars --> tariffs for easy revenue Export economies --> urban interests gain influence --> tariffs remain

Answer 62

Mexico in 1890s under Lamon Lore tweaked tariffs to help texitles tobacco and improve new industry such as steel and machinery Chile passed a tariff law to pursure industry.

Answer 63

Low tax revenue from administrative capacity Large informal sector; clear pattern from keane that informality means lower % of income tax as tax Reliance on foreign aid or primary resources 2. Gov. action needed for tax (improving tax base etc.) POlitical insts often have low contestability of power (conc. poltiical control), weak checks and balances, culture, staet buiilding, and a weak state LA: export dependence (customs easy), large informal sector, colonial legacy, caudilllismo tradition, lack of checks and baalances, social divisions, historic experiences of inflation and crises

Answer 64

Jenson's research says countries with high natural resource wealth mean tax capacity is much lower; same may occur for aid India income tax didn’t keep up with growth (piketty) reducing revenue. World Bank documented how China increased tax base by increasing levels Where political control is concentrated --> no progressive taxation or public services. Expect opposite in democratic powers (AJR) Swedishh 1500s example? Mapping land properly Peformance based pay for tax collectors in Pakistan?

Answer 65

Fiscal Capacity stunted by elites LA underdeveloped even comapred to EAsia. elites stop tax and spending to maintain status quo --> political participation much lower in LA. Democracy exists but didn’t change de facto power Democracy correlation with tax significantly weaker with v high income inequality

Answer 66

Engermann & Zolt: much longer for land wealth tax in LA than USA World Bank Report: Authoritarian took much longer to do spending as it could empower rivals LA to rest of world --> underdeveloped. 8.3% less of their GDP in total taxes, 6.5% in income. Also a large gap with East Asia

Answer 67

Liberalism was a face; lacked power to challenge oligarchs Brown Areas: Central Authority weak, lots of people in LA Lack of external wars like in EU. Mismatch between expectations and weak initial capacity. 4 Dimensions of State Strength: 1. Territory Allocation; can state control land 2. Economic Prosperity; can state effectively tax 3. Infrastructure Power: does state have organisational capacity to regulate and build Symbolic Power: respect and loyalty LA lacked all Chaos post independence --> survival and world economy for revenue --> compromises with local elite --> state lacked muscle and infrastructural power --> no shared citizenship and national identity.

Answer 68

1. Territory Post independence had ttons of internal conflicts (spain threats and internal competition, caudillas) 1860s managed to a degree, 1900s had nominal control but administrative reach weak 2. Ecnomic Capacity Indp. Wars costly and ruined trade routes, followed by civil wars Slow rail road development in spain and LA; transport sttill weak; thus abililty to tax was worse. 3. Infrastructure Power Gaining territory by compromises made building real infrastructure much harder; gov. jobs done through cliientism. Huge resistance in effective bureaucracy 4. Symbolic Power Lacked shared unity; encipient nationalism devoid of social content --> 'fictious liberalism' big gap between ideals and realities. Failure to bridge gap meant state wasn’t liked by many

Answer 69

Maintained high tariffs, had a varying impact dependent on area - Zones benefitted differently Temperate Lowlands: Land intensive exports --> drove up land values --> land owners win. However European immigrants meant labour wages suppressed --> globalisation worsened existing inequalities in the temperate low lands Tropical Lowlands; worse terms of trade --> small elite reinforced Highlands. Mixed Picture; areas w high endowments saw FDI with unequal growth. Areas lacking saw no FDI

Answer 70

- Early 1800s shipping a ton of goods England to keto (landlocked, in Andes) could cost 21 pounds, only 2 pounds to Buenos Aires Experienced significant boom in 1820-90: 2x terms of traded, yet maintained high tariffs

Answer 71

Cycle is More money gov had --> more railways --> more money gov. has Late 1880s Argentina Brazil had large railway. Geography represented barrier. Institutional stability needed for huge long-term investment and market couldn't coordinate this --> gov had to provide big push. Other side is big grab where funds for this went to rent seeking. Study suggests that both big push and grab happened. Was gov funding a benefit? Vital due to market failure. Big grab, but benefits so important Short-term shocks could have very long shadows disrupting the cycle

Answer 72

Numbers found that two way relationship did exist. Limited initial revenue was a very strong barrier to this. Short term shocks damaged this. Could derail railway expansion for a long time. Brazil's guaranteed dividend policy, but very high social rate of returns so high By ww1, often LA countries got 70% of revenue from export import Ecuador railway development after cocoa rose. Peru railway development fell after guano reserves fell. Small but sustained improvements better. Columbia 3% increase in capacity for revenue could've reached Argentina railway density.

Answer 73

Roots of high inequality come from colonial legacy; authoriatian states, no public goods, elitist extraction Distinction between settler (argentina, uruguay) and lsave economies (brazil), settler saw initial less inequality. Southern Cone grew through extraction of resources unlike technological change Railroads --> cheaper shipping --> global demand for land intensive products --> land rents rose faster than wages Resource basesd systtems --> commodity lottery -> depends on demand for products e.g. Argentinian meat, brazillian coffee, chilean nitrates --> globalisation potential to reinforce rather than reduce inequality

Answer 74

Consistnetly showed increase in Gini coefficient in southern cone from 1870-1910 Gaps between top and bottom 10% also showed widening Southern Cone economies grew sig. but varied a lot; Argentina faster than EU, US even faster. Inequality also rising Brazil census data shows population and economic activity towards dynamic south and south east with coffee IPF analysis shows inequality had a capacity for even higher than 1870

Answer 75

2 main stages WW2 and after the war up till 1980; high growth period and average annual GDP of about 5%. Biggest jumps in productivity Huge social shifts: population tripled, and urban share went up to 2/3 Industrialisation Periods: 1. Pragmatic ISI Post WW2 2. Classical up to Mid 60s; consicouns planniing but fx struggles 3. Mature mid 60s up to 80s. Strategies ddiverge around export or import focus ECLAC provide intellectual firepower for this idea; gave ISI a strong rationale. Legally involved in policy and integration --> led to Latiin Ameriica Free Trade Association inequality stayed stubbornly high Big Downside: LA share of global trade fell sig. BoP crisis and a laack of Fx, inflation (brazil, southern cone linked ot budge deffiicitts espec after oil shocks in 70s LA tech gap maintained the same with little innovation esp comapred to SE

Answer 76

“The repeated boom-and-bust cycles of commodity exports created policy frameworks oriented around fire-fighting rather than pre-emptive institutional building.” — Bértola & Ocampo (2012) * Slow period in depression 0.6% annual * Then goes to 5% Population 100 - 349 million Urbanisation 32 --> 65% Textiles, food, cement, oil refineries ---> cars. Export as a % of GDP fel State development bank in Chile Columbia and mexico in 1830s LA manufactured exports grew as a share

Answer 77

Industrialisation by stages; ending with making consumer goods --> hopefully make backward linkages However EU, these linkages started before or during it.; LA was less dynamic Gerschenkron says Industrialisation in late times needed a big push. LA late late only focused on consumer goods, less capital and less institutional backing. Initial phase (exuberance) led to easy success and fuel unrealistic expectations Led to exhaustion, replacing easy goods is easy, but replacing intermediate and capital goods is harder.. Stuck with high cost consumer industries dependent on importing capital --> worsens BOP Barriers to backward linkages: Economical: - Industrialists worried about reliance, location and quality of local imports - No incentive to go after local as input imports have low tariffs - Technological strangeness; diff knowledge base, skills Politically: - Immediate interests may have been to status quo rather than industrialisation - Gov. planners (technicos) pushed harder for backwards linkages e.g. Brazil forced this compared to Mexico

Answer 78

Prebisch 1949 --> 60s talking about how LA had an industrial sector with no specialisation and super protected Brazil in 50s shows Gershenkron big push; big investment in steal and capital goods. Staged Sequential Industrialisation --> resistance to innovation, exporting and backward linkages Happened w/o social upheavel. New industrial class weaker --> hurt export promotion efforts and disappointment w outcome

Answer 79

Cycle of populism. High income inequality -- > intense political pressure --> improve working class income --> poor policy choices 'Populist policy cycle' which starts well and ends badly Urbanisation --> urban based political leaders (peron) --> appealed directly to urban class (ISI, industrilisation) --> urban centric populist redistribution Preferred distribution rather than true redistribution like land reform and taxes.

Answer 80

expansioanry fiscal policy --> boosts demand for no export sector --> pushes up nominall wages --> import the same so real wages increase as price of tradeables rise --> export sectors less valuabale --> exports fall and import demand rises --> trade deficits --> fx reserves drained --> BoP crisis and devaluation --> imports more expensive and hammers real wages --> new floating fx rate --> sustained high inflation --> financing through printing money and other extreme attempts

Answer 81

1. Argentina; 1940s under Juan Peron Expansionary polic, fixed fx, protectionism for urban workers -> urban wages up 62% in 3 years By 48 farm output falling, inflation and bad rate --> economy contracted Peron admitted to overspending

Answer 82

Strong urban support --> huge expansionary fiscal policy --> GNP grew 9% in 71, 17% increase in real wage in same year By 72 growth negative, inflation 152% and no reserves. By 72 inflation at 500% and amlitary cou

Answer 83

Suspended foreign debt payments, froze fx, increase urban wages --> 8% GDP growth in 86 , real wage increase 20% Trade defficit, no reserves --> hyperinflation riising 100% in one month Sept 1988

Answer 84

Delegative Democracies (DD) - meet basic checklist (elections, sufferage) but de facto power differs to representative democracies Difference comes from colonial legacy and socioeconomic problems that democracies inherit ; argentina, peru, Ecuador, Bolivia Delegative form is enduring and sticky; economic crises reinforce it

Answer 85

DD presidents try and change terms to allow for re election e.g. Garcia in Peru. DD success is about the person but the institution. Modern DD traced to old caudillismo, populism, strongmen rulers Conditions of democratisation much more different in post WW1 in Europe compared to LA in 1980s, transitioning in hyperinflation and stagnation. --> sense of urgency Long crises create a prisoners dilemma --> undermines societal trust as everyone looks out for each other

Answer 86

Language by presidential candidates; outsiders and saviours --> once elected --> ignore legislature and judiciary Argentina Peru show how economic expansion then harsh austerity Huge sweeping reform; crusado plan in Brazil Urgua and Chile; stronger institutions constraint presidents --> incremental policy (Uruguay President Sanguinetti pursued incremental economic policies, negotiated with congress, same with Chilke under President Alywin) Only Uruguay and Chile revived earlier political insitutions such as congress to give sonsitutional restrictions and create checks and baalnces. Even successful presidents like Sanguinettti and Alywin failed to promote constituional reform for relection. Incumbents never lasted past more than one cycle.

Answer 87

Initial shift to ISI was reactive to global depression. Economic outcomes in LA defined by the variation in political economy. Moving away from ISI pre-70s was tough for LA due to resistance from industrialists benefitting from ISI --> ECLAC, Growth of Industrialists, Urban Class growth all gave power to ISI Vested interests against EOI: ECLA interests, industrialists, politically easy to keep domestic consumption and jobs happy. Compared to East Asia (SK and Taiwan), colonialism and war weakened the dominant classes there -> led to autonomous powerful states --> could push EOI with less internal opposition --> symbiotic state and industrial rs East Asia greater reliance on US --> aligning with US open economy + received aid through Cold War Pressure Large doemstic markets --> less pressure to look outside for growth.

Answer 88

For 6 main countries, industrial output jumped but imports dropped as a % of GDP 1929 - 47 Political Coalitions shifted in response to fallout; not uniform. Highlights relations between industriialists, elite, new government Manufactured exports for agrentina and brazil succeeded in 1940 but didn't go into globla markets Compare share of manufuactured exports, lagged really behind SEA Argentina stog go cycle under Peron for ISI and failing ISI determined by political elites interaction

Answer 89

1. US actively promoted free market rules e.g Chile under authoritarian Pinochet Chicago Boys implementing Friedman monetary -- US support for regime and Friedman. --> Tied to Cold War and US fear of socialist regimes 2. Neoliberal reforms had -ve social and economic reforms e.g. deep recession, high unemployment in Chile under Chicago Boys --> worsening inequality and rising debt Dismantling of earlier dev. Models - rapidly tearing these down left them vulnerable (global market swings, capital flight) --> foreign investors prioritised US funding training of LA economists at Chicago. Influence of IMF and World Bank (conditions for structural adjustment programmes - fiscal austerity)

Answer 90

1. Security used as justification, but claims seem thin. 2. Money; protecting US companies, saving capitalism 3 of 41 linked to trade 3. Main driver: Domestic Politics Supply: How easy it is to intervene Demand: Domestic Politics, Global Strategy; US wanted to project power globally. Domestic political wins was easy. Cold War; wanted reliable allies instead of democratic. --> political priosners iin LA exceeded in Europe.

Answer 91

Political (Kahler's Hypothesis): 1. Ensuring Stability of System; powerful states leaning on borrowers, lenders of last resort 2. Regulation: supervising banks to protect savers 3. Adjustment: policy changes to service debt. Ability and willingness is also political. Hard Regimes; political muscle to push through austerity whereas soft regimes lack it. Points to domestic politics as resistance to fundamental reforms e.g. US only forced into action through threat to their own system, scope only limited to crisis management rather than fundamental reform. North tried to stop LA debtors forming a coalition

Answer 92

1898 - 1994 --> 41 successful governments in LA 1 governments every 2 years for 100 years Kennedy didn’t think missiles in Cuba didn’t effect the nuclear balance despite Khruschev. Castro regime better Reagan used soviet missiles and domino effects in Nicaragua. Most experts dismissed. Nicaraguan gov. even offered to sign treaty. Lyndon Johnson Dominican Republic; scared of republican criticism of losing it. 1920s; Nicaragua revolt was linkted to mexican soivet plot agaisnt the Panama canal; NYT wrote about Bolshevik wedge. But Russia lacked diplomatic relations. Chile 73' where US policies worsened economic problems to destabilise disliked gov.

Answer 93

Politics within debtors: Intense pressure from IMF vs domestic political collapse --> couldn’t have united front Mexico; established authoritarian system PRI and technocrats (hard) --> executed reforms Argentina: new democracy, huge pressure from unions, anger on public policy (soft) ---> resisted adjustments Peru banks tried to force adjustment on their own in the 70s but failed despite flashing warning signs. Soft authoritarian regimes used finance to buy social peace and avoid reforms Mexico 82 collapse led to FED bridge loans and CB, G5 emergency cash, IMF used structural adjustment and pressured involuntary lending to private banks.

Answer 94

Hypothesis: Some wins (lowered inflation, higher exports) economic growth was low and unstable --> social outcomes disappointing and even got worse Northern: Manufacturing for US, high import content Southern: Primary production, trade within LA Lacked stable FDI; boom and bust. Social spending rose 10 --> 14%. Modest improvements, continued too 80s. Access to education same, same with coverage Labour: rising unemployment. Big jump in informal sector employment --> worsened inequality Poverty rate higher than 1980s. Chile and Uruguay better at translating growth into poverty

Answer 95

Slump from 98 - 2002 ; per capita gdp shrank by 3.6%. Growth rate was half pre debt crisis overall xport volumes grew by 9% and FDI increased. But export sectors didn't have any backward linkages nor technological links. Labour productivity stagnant. Before debt was growing at 2.5% per year. Privatised gains didn't diffuse --> economic dualism. Labour: rising unemployment. Big jump in informal sector employment --> worsened inequality Poverty rate higher than 1980s

Answer 96

Fernando Fajnzylber called this the "modernization of backwardness" — modern industries emerging without transforming the broader economy. In Mexico, NAFTA liberalization led to the expansion of the maquiladora export sector, but domestic SMEs were crowded out, leading to a two-track economy.

Answer 97

In Bolivia, SAPs under the “shock therapy” model reduced inflation drastically, but malnutrition and unemployment among indigenous populations spiked.

Answer 98

Scholarly support: Miguel Centeno (1997) referred to this process as the "death of the state" in Latin America — states became administrators of austerity, not engines of development. R&D investment remained below 0.5% of GDP on average across Latin America, compared to over 2% in East Asia.

Answer 99

China isnt really challenging LA position as primary vs manufactured goods; but potential along the road. Not much sig. fdi because of China. Sometimes even positive link. But China is capturing more of the FDI, but attract different sources and no evidence of trade off. Mexico different as it is manufacturing based; commerical competiton and china takes up a large compeittion w FDI. Shifting from electrical FDI. China's rise is reinforcing trade deficits and primary specialisation Columbia China deficit 10x total deficit Mexico; chinese manufacturing exports faster than any other country

Answer 100

Rise in 80s and 90: External shocks + austerity--> regressive impact, sometimes oligarchs did even better Market orientated reforms: Reforms had small regressive impact (liberalisation, labour) 90s: Technological use made high skilled workers more in demand, reduce demand for less skilled labour --> worsening inequality. Less skilled workers also had less bargaining power. Fall in 2000s Decline across wide range of countries not just left leaning gov. or because of commodity boom Confluence: improved macroecnomic stability, improved growth and job creation, expansion of basic education from 80s and 90s, shocks of 90s subsided Policy: active labour market policies (improving minimum wages, labour unions), progressive social spending (Conditional Cash Transfer) CCT's provide direct cash payments dependent on sending kids to school, health checkups - very well targeted to poorest houses.

Answer 101

6 phaes of inequality: Opening up saw sig. inequality. 2001 crisis again Post 2002 inequality fell towards low intensive sectors, strengthening labour instituions, emergency programme spending

Answer 102

Didn't see ihigh inequality in 90s as tariffs alr low and labour insts. Consistent steady fall in gini coefficient, income of poorest 10% grew faster than top 10%. Narrowing of wage differentials across economic sectors and geographical Economic transfers and increasing coverage Minimum wage increases and CCTs. Earlie expansion of 80s paid off

Answer 103

Saw same inequality increase in 90s liberalisation (skill premium, labour structure) After Nafta, gini went to 1980 level Progressa; CCT programme. Happened w even slow growth. Income growth fasterst for bottom 10% Changes in hourly wages and more equal education distribution.

Unit 3 AT04: Structures Endowments and Institutions in the Economic History of LAtin America (Coatsworth) Flashcards

(128 cards)