Chapter 28 Postwar Latin America
Economic Nationalism and Problems of Development
Economic Nationalism and Problems of Development
Like the new
nations emerging in Asia and Africa after World War II, Latin American
countries also grappled with problems of modernization and the need to
establish their independence from the more developed economies of the
Western industrial powers. As they did so, however, they too confronted
the heritage of the colonial past and the environmental and social prices
independence would require.
Monoculture vs. Industrialization
Before 1945, most
Latin American countries were rural, agricultural countries. Their exports
centered on one or two cash crops that were grown for export to European
and American markets. Brazil, Colombia, El Salvador, and Guatemala grew
coffee; Argentina and Uruguay exported beef; Cuba, Mexico, Brazil, and
Peru sent abroad sugar, while Chile, Bolivia, and Mexico exported
minerals. This reliance of an entire region, or even an entire country, on
a single crop is known as monoculture.
In good years, monoculture brought in high earnings. When world prices
were low, however, or when natural disasters such as drought or disease
struck, countries suffered.
During the dark days of the global depression in the 1930s, Latin
American leaders realized the importance of economic diversification for
national independence. When the bottom dropped out of their commodities
prices, they were unable to buy needed manufactured goods from overseas.
Consequently, after 1930 most Latin American countries adopted policies of
economic nationalism. Many raised high tariff barriers against overseas
goods and used government grants or even wholesale government investment
in businesses and industries to encourage national production and
self-sufficiency. Wartime interruption of world trade further helped
countries like Mexico and Brazil diversify their exports and develop new
markets for their manufactured goods. Even with growing diversification,
however, monocultures remained the foundation of most Latin American
economies for many years after the war.
Social consequences of monoculture. Monoculture
tends to favor crops grown on large plantations, known as
fazendas in Brazil, fincas
in Central America, or haciendas
in Mexico. On these large estates, workers received low wages. Many of the
workers were families who came to the plantations at harvest time.
Rigoberta Menchú, a Guatemalan woman of the Quiché
Indian group, described her family’s experience as workers on the fincas
. From the time she was an infant, her family made the long trip by truck
from her cool mountain village home to the hot lowlands where they picked
cotton or coffee.
turned eight I started to earn money on the finca.
I set myself the task of picking 35 pounds of coffee a day. In those days,
I was paid 20 centavos [20
cents] for that amount. . . . I now felt that I was part of the life my
parents lived. It was very hard on me. I remember very well never wasting
a single moment, mainly out of love for my parents and so that they could
save a little of their money, although they couldn't really save any
because they had to tighten their belts so much anyway."
In some countries, such as Mexico, Colombia, or Brazil, small
farmers did grow food crops such as corn, beans, vegetables, and coffee.
But medium sized farms were few in number. Most of the small farmers owned
so little land that they could barely support their families. The Menchú
family, for example, had some land in the mountains outside of their
village where they planted corn and vegetables. But these small mountain
fields yielded only the barest essentials; so Rigoberta and her family
traveled to the fincas every year to earn money.
In good years, the export of monocultural crops like coffee, sugar,
cotton, and beef did bring in income for Latin American economies. Owners
and managers of the large plantations profited. But, because of the low
wages paid to the agricultural workers and the absence of other jobs in
the rural areas, the standard of living in the countryside remained
extremely low and many people lived in conditions of utter poverty.
Industrialization. After the war, many Latin American leaders
believed the path to prosperity lay in industrialization. Only industrial
growth, they thought, could provide more and better jobs for the poor.
Mexico City, Caracas, Buenos Aires, São Paulo, and others became centers
of industry, where factory jobs provided higher paying jobs than could be
found in rural areas.
Many Latin American countries protected their new industries by
limiting the importation of foreign products or imposing heavy tariffs on
them. At the same time they encouraged their own local industries to
produce goods previously imported from overseas—a policy known as import
substitution. Soon Colombia, Mexico, Brazil, Chile, and Venezuela had
national industries that produced manufactured goods for sale in their
Many Latin American governments themselves became involved in
developing businesses. In Mexico, for example, the government ran the
national petroleum company, PEMEX. In Brazil, the government owned and ran
the first steel mill, as well as the national oil company, the major
electric utility, and the national airlines. In Argentina, the government
owned the telephone company, as well as many other companies. Governments
justified their entrance into the economies on the grounds that national
capital was limited and some industries were too important to be left in
the hands of foreign owners.
Urbanization. As industries began to grow in the cities,
individuals from the rural areas began to move to the cities looking for
work. Young men, young women, and sometimes entire families left the
villages where their families had lived for centuries. Some were Indians
who left behind the rich culture of their forefathers. Some were the
descendants of African slaves who believed that the cities held better
opportunities for them. Other migrants were the grandchildren of European
immigrants who had come to Latin America before World War I. All of them
came to the cities hoping for a better life.
In the cities, migrants settled wherever they could. Few possessed
much money or education. They built their neighborhoods out of wood, tin,
and cardboard scraps. They lacked running water, electricity, and even
sewage. Such neighborhoods became known as favelas
in Brazil, barriadas in Peru, and colonias
in Mexico. The middle and upper class residents of the cities looked down
on these slums that lined the roads into the city centers or crept up the
Carolina Maria de Jesus, a slum dweller in Brazil who supported
herself and her three children from recycling trash and reselling things
from the dumps, painted a vivid picture of these growing shanty towns.
"I classify São Paulo this way," she wrote. "The
Governor's Palace is the living room. The mayor's office is the dining
room and the city is the garden. And the favela [slum] is the back yard
where they throw the garbage."
In her diary, Carolina wrote about the shack that she had built with her
own hands, how she rose at 5:00 every morning to fetch water, and the
struggle every day to find food to feed her three children:
thinking that I had to buy bread, soap, and milk for Vera Eunice [her
daughter]. The 13 cruzeiros [18 cents] wouldn't make it. I returned home,
or rather to my shack, nervous and exhausted. I thought of the worrisome
life that I led. Carrying paper, washing clothes for the children, staying
in the street all day long. Yet I'm always lacking things, Vera doesn't
have shoes and she doesn't like to go barefoot."
The population explosion. As
these slums began to grow, it soon became apparent that they grew not only
from the arrival of new migrants, but because families in the slums were
large. Demographers, population experts, explain the problem as part of
the demographic transition Latin American countries have been
experiencing since World War II.
Pre-industrial societies, these scholars point out, typically have
a high birth rate and a high death rate. As societies industrialize,
however, bringing about a higher standard of living, better diets, and
improved health care, the death rate begins to decline. As the death rate
declines, women gradually choose to have fewer children because they know
that their children will survive. But since birth rates decline slower
than death rates, there is a period when death rates are low but birth
rates are high. Usually, the lag between the falling death and birth rates
is one generation. This is the period of the demographic transition.
Population size "explodes" when birth rates exceed death rates,
producing large generations of children who will soon have children of
With more and
more people to feed, Latin American countries faced extraordinary
challenges after World War II. More people meant that more jobs were
needed. Rural areas had to produce more food. Schools had more children to
educate; clinics and hospitals had to care for more patients. The only way
to keep up with these demands was for countries to develop their economies
as rapidly as possible. With little local capital to fuel economic
development, most Latin American countries looked for help from outside to
fund their desperately needed economic development projects.
By the 1970s, many Latin American governments were deeply involved
in economic development projects. In Mexico, the government invested
heavily in steel plants, oil production facilities, mines, and
agricultural schemes for rural areas. In Brazil, the military government
laid plans to develop the Amazon. They mapped out a vast highway system
that would make it possible for Brazilian settlers and Brazilian companies
to tap the riches of the forest. Argentina and Brazil planned to build a
huge dam to generate power for industries. Latin American governments
began to borrow money from international banks to finance these projects.
By the 1980s, the heavy borrowing by Latin American governments
began to generate concern in Europe and the United States. Some U.S. banks
had lent huge sums to Mexico, Argentina, and Brazil. In return, Latin
American governments paid the banks interest on their loans. But the banks
began to fear that Latin American countries would not be able to pay the
interest owed. If the Latin American countries missed their interest
payments, then banks in the United States and Europe might collapse. The
problem became known as the international debt crisis. Many banks began to
refuse further Latin American loan requests.
As the crisis deepened, many Latin American governments resorted to
printing more money to pay their own employees and inflation began to rise
In an effort to end the financial crisis, Latin American countries sought
help from the United States and international agencies. These
international agencies agreed to lend Latin American governments more
money but only on certain conditions. They required that governments cut
back on their spending, sell their factories, and lower inflation.
These conditions do not sound harsh on paper, but in order to
comply with them, governments had to fire workers in order to cut
spending. They had to stop subsidizing the cost of food, transportation,
and fuel in their countries. They had to sell government owned factories,
and the new owners fired hundreds of thousands of unnecessary workers. To
comply with these conditions, ordinary people lost their jobs and the cost
of living rose.
To solve these
problems of excess population growth and debt, Latin American planners
emphasized rapid industrialization, the exploitation of natural resources,
and the settlement of previously remote frontier regions. Industry would
create jobs, they reasoned, while natural resources would pay off the
international debt and settlement of frontiers would relieve overcrowded
cities. But these strategies carried high environmental costs. Developing
industries created new jobs but also gave birth to new
In Mexico, pollution became a serious environmental and health
issue. Severely polluted areas included Mexico City, which had become the
largest city in the world, as well as the northern border with the United
States, and the oil rich regions of the Gulf of Mexico. Deforestation in
Mexico eventually claimed over one million acres of forest each year.
Trees were cut for lumber, to create pastures for ranches, to drill for
oil, or to build roads. In the region occupied by PEMEX, Mexico's oil company, beaches were stained with raw sewage
and industrial waste. Regular oil spills killed fish and polluted
waterways. Once known for its beautiful "transparent" air,
Mexico City, with a population of 20 million, became notorious instead for
its smog—air highly contaminated from automobile emissions and factory
In Brazil, government officials saw development of the vast
ecologically sensitive Amazon rain forests as the potential solution to
both the nation’s population growth and its international debt.
Development of the Amazon began with the building of the trans-Amazon
highway in the 1960s to encourage the movement of settlers into the Amazon
frontier. This led to the cutting down of hundreds of thousands of acres
of virgin forestland. Once the forest canopy had been felled, however,
heavy rains washed away the thin topsoil, making simple agriculture almost
Since the Amazon holds rich mineral deposits, the Brazilian
government drafted an ambitious program to develop gold, iron, and bauxite
mines, and to pay off its debt with the income they produced. Along the
Carajás railway, constructed in the northeastern Amazon, the government
developed an industrial province organized around mining and steel
production. Development, however, increased the rate of deforestation and
pollution in the area.