Chapter 28 Postwar Latin America

Section 1 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[3] 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.


"When I 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."[4]


            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 respective countries.

            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 surrounding hillsides.

            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."[5] 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:


"I kept 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."[6]


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 their own.

International Debt

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 rapidly.[7] 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.

Environmental Issues

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 problems—especially pollution.

            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 smoke.

            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.[8] 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 impossible.

            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.