The Economic History of Latin America since Independence
The Struggle for National Identity from Independence to Midcentury
Overview of Independence in Latin America
Timeline of Independence: Most of Latin America achieved independence by the early 1820s following a prolonged period of economic and political instability that caused significant drops in living standards.
Impact of Napoleonic Wars: Hostilities between Great Britain and Spain disrupted Latin America's external trade. Napoleon's invasion of Spain in 1808 destabilized Spanish authority in America, fostering independence movements.
Key Events:
British exports to the Americas surged from £7.8 million (1805) to £18 million (1809).
Brazil became a separate kingdom in 1815 and crowned Dom Pedro as emperor in 1822.
Mexico formed from New Spain, under Agustín de Iturbide (an empire briefly), and annexed Central America.
By mid-1820s, Spain had lost control over most of its colonies, retaining only Cuba and Puerto Rico.
Other areas like Santo Domingo gained independence from Haiti in 1844.
Political Turmoil Post-Independence
Ongoing Conflicts: Post-independence, national borders established by colonial powers often faced disputes.
In 1823, Central America split from Mexico, leading to the eventual dissolution of its federation into five republics.
Texas broke away from Mexico in 1836; the Yucatan revolted in 1839.
Gran Colombia, led by Simón Bolívar, collapsed in 1830, and the Peru-Bolivia union fell after a Chilean invasion.
Even Brazil faced boundary disputes and internal revolts, such as the attempt to annex Banda Oriental, which resulted in Uruguay’s creation in 1828.
Separation and Conflicts: Other turmoil included civil wars over political ideology, social structure, and the relationship with the Catholic Church, contrasting with the quicker consensus achieved in the U.S. after its independence.
The Colonial Legacy in Latin America
Colonial Economy: Dominated by mercantilism, where prosperity linked to capital accumulation meant an emphasis on acquiring precious metals.
Colonial authorities enforced trade monopolies: Latin America had to buy imports exclusively from Spain and Portugal and sell commodities back to them.
Trade Balance Illustration:
Iberian Peninsula's commodity exports exceeded Latin America's commodity imports, establishing a visible trade deficit favoring Spain and Portugal.
Taxation and Transfers: Various taxes (on mining, sales, ecclesiastical tithes) were meant to profit imperial powers, exacerbating balance-of-payments deficits in colonies.
Impact on Population: The underpopulation and administrative ease of drawing borders meant disputes were inevitable. A table of populations before and after independence (1788-1823) illustrates shifts in demographics.
Inequality in Trade: Evidence of trade deviance included the Anglo-Guatemalan dispute over Belize and boundary disputes between Venezuela and Guyana.
Economic Challenges After Independence
Colonial Economic Features: Corruption, limited local financial structures, and labor systems largely persisted post-independence. The colonial fiscal framework struggled to adapt.
Initial Economic Indicators (circa 1800): Latin America was among the richer parts of the developing world, boasting a GNP per head similar to the U.S. Despite indicators of wealth, independence significantly led to economic decline.
External trade collapsed, resulting in capital flight and operational challenges in mining.
Restoration of Economic Activity:
Independence facilitated movements toward free trade, leading to British recognition and capital access; however, this often came with inflated expectations leading to defaults.
Free Trade and Capital Access in New Republics
Trade Consultation Post-Independence: Countries moved from restrictive colonial trade monopolies toward free trade; however, the transition did not imply an absence of regulation.
Domestic producers faced competition against imports, leading to a mixed reception among local elites.
Changes in Economic Structure: Despite alterations in external engagement, several sectors faced stagnation due to labor inefficiencies and political fragmentation.
Social Structures and Labor Dynamics
Labor Market Conditions: The labor landscape showed continuity with the colonial period, characterized by coercive practices: slavery persisted into the 1880s in places like Brazil and Cuba, with debt peonage emerging as a dominant labor form in agriculture.
Shifts in Land Tenure: Significant insulation and stability in land tenure systems meant that benefits from economic engagement took longer to affect labor relations.
Political and Economic Diversity Across Latin American Nations
Divergent National Paths: While some countries embraced agricultural and resource extraction opportunities (Chile with copper, Peru with guano), others stagnated due to an unyielding dependency on traditional exports.
Political Instability: Regions like Central America continued to face chronic instability which hampered economic formulation and policy advancement.
Export Sector Dynamics Post-Independence
Commodity Focus in Exports: After enduring downturns in natural resources disrupted by wars and market instability, countries like Mexico, Colombia, and Chile eventually recovered some mining output.
Emergence of Agricultural Exports: The demand for nontraditional products like coffee and cacao rose, contributing to overall growth in certain regions despite earlier setbacks.
Export Metrics and Ranges: Tables detailing export per capita reinforce modest performance improvements across Latin America, highlighting disparities based on product focus and market access.
Conclusion: Post-Independence Latin America
Unfulfilled Expectations: Despite initial enthusiasm, Latin American nations faced myriad challenges following independence, exacerbated by political strife, economic fragmentation, and evolving global dynamics. Yet the period also laid foundations for future economic integration and reform, impacting labor, land, and trade practices over subsequent decades.