Modern Latin America

Phase 1: Initiation of export-import growth, 1880-1900

Because of the industrialisation in Europe, British labours needed to purchase food they could no longer cultivate. And captains of industry were seeking raw materials, particularly minerals. They therefore looked abroad Ð'- to Latin America amongst others.

Argentina had vast and fertile pampas and became a major producer of agriculture and pastoral goods : wool, wheat and beef fx. Chile resuscitated the copper industry. Brazil and Colombia produced coffee. Cuba produced coffee, sugar and tobacco. Mexico exported a variety of raw material goods, such as henequin (a fibre used for making rope), sugar, copper and zinc. Central America exported coffee and bananas. Peru produced sugar and silver.

Latin America began the import of manufactured goods especially from Europe. They bought textiles, machines, luxury items in relatively large quantity.

Between 1870 to 1913 Britain increased their investment in Latin America ninefold. British investors owned approx. 2/3 of the total foreign investment in Latin America. The control of key economic sectors where now passing into foreign hands.

An export-import development was established to increase the raw material sector in Latin America, to enhance export. The capital came, of course, from abroad.

The growth of Latin Americas export was accompanied by a rationale: Liberalism.

Liberalism was imported by France and England, but because the Latin America had not undergone significant industrialisation they therefore lacked the social structure that had nurtured liberalism in Europe.

In the second half of the eighteenth century there was a huge increase in trade. Smuggling had grown into a huge percentage of total trade throughout Portuguese and Spanish America. So why not legalize free trade and gain taxes? The apologists of free trade quoted freely from European theorist who justified free trade. They said: "reducing trade and thereby reducing income". But politicians stated that Latin America is not well suited, either by its resources or by its bargaining position, to violate the principles of free trade.

The economic decisions made in Latin America were restricted to: "the elites", (less than 5 percent of the population). The elites had a deep concern about the racial inferiority of their native population. They thought that heavy immigration from northern Europe were the solution to their lack of skilled labour. Many elites also doubted that there countries could ever achieve a distinct civilization. And the tropical countries also had worries about their climate, which European theorist told them never could support a high civilization. Therefore, the tropical countries were disqualified in the pursue of the liberal dream.

The growth of the export economies led to subtle but important transformations in society: A modernization of the upper class elite. Landowners and property owners sought opportunities and maximized profits.

Economic and social transitions also led to political change. Latin American elites (mostly landowners) began to take a clear interest in politics and began to pursue political power. Landowners, and others, took direct control of the government Ð'- as in Argentina and Chile. They sought to build strong, exclusive regimes, usually with military support Ð'- strongly resembling European and US democratic models. In Argentina and Chile there was a very low competition between political parties, so one might think of such