Misplacing blame.

Photographer: Federico Parra/AFP/Getty Images

Latin America's 100 Years of Slow Growth

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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If you’ve never watched any of Hans Rosling’s Gapminder animations of rising living standards around the world since 1800, you really should. If you’d prefer the version with Rosling -- a Swedish physician and public-health expert -- acting as infectiously unhinged narrator, you can watch his famous 2006 TED talk, which is currently at 9.9 million views, or one of the nine more TED talks he’s given since.

Heck, even if you’ve already seen Rosling speak multiple times and wasted hours at Gapminder.org, as I have, it’s rewarding to go back and take a look. That’s how I just spent half my morning.

Still, you probably don’t have time right now, so here’s the short version: Things really have been improving. With occasional interruptions for wars, revolutions and epidemics, people in the vast majority of the world’s countries have been getting wealthier and healthier.

Also evident in Rosling’s animations is the great breakout to much-higher living standards that the U.S., Canada, Western Europe, Australia and New Zealand made in the 1800s, followed by the great catchup in Asia since the middle of the 20th century. Some African countries have begun making big strides, too, although sub-Saharan Africa remains the world’s poorest region by far.

Then there’s Latin America and the Caribbean, whose part in this story has always intrigued and saddened me. In the 19th century, some of the countries and colonies to the south of the U.S. were among the world’s most affluent. In the 20th century most of them have become much more affluent in an absolute sense (Haiti is the tragic exception). They have nonetheless lost relative ground, especially during the past half-century, as rich countries just got richer and Asian nations broke through to wealth.

In working on my column on Venezuela’s economic mess last week I spent some time looking at the growth trajectories of the other big Latin American economies. After that, of course, I couldn’t resist making some charts. The metric here is gross domestic product per capita, in constant 2005 U.S. dollars. In the interest of keeping the charts readable, I’ve separated the countries into the four biggest, by population, and the next four. Here’s how things have gone down in the Big Four:

Argentina has had the most eventful time of it, and not in a good way. It started out as the most affluent of the four and ended up a close second, but has had some really bad times in between due to war with the U.K. and repeated financial crises. The two most populous countries in the region, Brazil and Mexico, have grown more steadily but certainly not spectacularly. And Colombia seems like maybe just maybe it’s turned a corner in the past decade, although its main export is oil so that may not last.

Go to the next four, and there’s a dramatic winner and a dramatic loser:

Venezuela was struggling long before Hugo Chavez became president in 1999, although he left the country so vulnerable to the recent drop in oil prices that I imagine 2015 will see it lose lots of ground. Chile is South America’s greatest economic success story -- a big commodity exporter (copper, mainly) that has escaped the resource curse that so often bedevils such countries. Peru had a terrible 1980s and 1990s, but things have been looking up lately. Ecuador too has been seeing growth after a quarter-century of stagnation but it, like Colombia and Venezuela, is heavily dependent on oil.
QuickTake Venezuela

So among the larger Latin American countries, there is one great success, Chile, one great failure, Venezuela, and a bunch of countries that have been getting more affluent, but slowly. You can see this more clearly when you bring in some countries outside Latin America and the Caribbean.

Compared to these other, more dynamic economies, Latin America seems to have been making hardly any progress. I’m not even going to try to go into all the possible reasons for this, in part because they vary greatly among countries. I am willing to go out on a limb and say that I don’t think either U.S. imperialism or persistent bad luck is a satisfactory explanation for Latin America’s slow growth. Clearly these -- with the possible exception of Chile -- have not been among the world’s best-managed economies. And that really is too bad.

  1. I generally try to use GDP numbers adjusted for purchasing-power parity in making such comparisons, since they better represent relative living standards. But the World Bank doesn’t have that data for Argentina, so I went with unadjusted GDP.  

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
James Greiff at jgreiff@bloomberg.net