Economic Systems and Development in Latin America

Flashcards covering key economic terms and concepts relevant to Latin American development.

Mercantilism

An economic system dominant in Europe from the 16th to 18th centuries, emphasizing state control over trade and accumulation of wealth through exports over imports.

Export-led development

A strategy where economic growth is driven by producing goods for export, often seen in East Asia but also attempted in Latin America.

Mercantilism

An economic system dominant in Europe from the 16th to 18th centuries, emphasizing state control over trade and accumulation of wealth through exports over imports.

Export-led development

A strategy where economic growth is driven by producing goods for export, often seen in East Asia but also attempted in Latin America.

Import-substitution industrialization (ISI)

A strategy used in Latin America from the 1930s-1980s that aimed to reduce dependency on foreign goods by fostering domestic industries through tariffs and subsidies.

Infant industries

Newly established industries that are not yet competitive internationally and often require state protection (like tariffs) to develop.

Declining terms of trade

When the price of a country's exports falls relative to its imports, making trade less favorable and potentially leading to economic struggles.

Debt crisis

The financial crisis in Latin America in the 1980s caused by excessive borrowing in the 1970s, leading to defaults and IMF intervention.

Devaluation

The reduction of a currency's value in relation to others, often used to boost exports but can also lead to inflation.

Capital flight

The large-scale movement of assets or money from a country due to economic instability or lack of confidence in the government.

Recycling process

In the context of debt, refers to how petrodollars (surplus money from oil-rich nations) were lent to developing countries, contributing to the debt crisis.

Stabilization policies

Economic policies (often from the IMF) aimed at controlling inflation and deficits, typically through austerity measures.

Structural reform

Long-term changes in economic policies, such as deregulation and privatization, to promote market efficiency.

Neoliberal or market reform

Policies emphasizing free markets, privatization, deregulation, and reduced state intervention in the economy, dominant since the 1980s.

Window of demographic opportunity

A period when a country's working-age population is relatively large compared to dependents, potentially boosting economic growth.

Informal sector

The part of the economy that operates outside formal regulations, often consisting of unregistered businesses and workers without legal protections.

Resource endowments

The natural resources available to a country that shape its economic structure and development.

Inequality possibility frontier

A theoretical concept showing the maximum level of inequality sustainable in an economy.

Extraction ratio

Measures how much of potential inequality is realized in a society, often linked to elite control of resources.

Gini coefficient

A measure of income inequality, where 0 represents perfect equality and 1 represents extreme inequality.