Johan Fourie's blog

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Lessons from Latin America

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MontevideoI’ve spent the last week in Montevideo, Uruguay, attending a Summer School* on the economic history of the region. I’ve listened to presentations on demographic change in Chile, war in Bolivia, and regional inequality in Brazil and met students from Colombia, Ecuador, Argentina, Mexico and, of course, Uruguay. I’ve been exposed to my own ignorance: Latin America to me was a continent of football, Spanish and partying. And while these are central to Latino life, I’ve been exposed to its past variations – the diverse impacts of colonialism, independence, and post-independence growth and stagnation – and present peculiarities – the work ethic of São Pauloan Brazilians, the Italianness (and therefore fierce hand-gestures) of the Argentines, the placid nature of Uruguayans (in contrast to the outlier, Luis Suarez).

I’m embarrassed to say that I had thought of Latin America much like most of the world thinks of Africa.

This is tragic because we, as Africans, have much to learn from the Latin American experience. Argentina, and specifically the area around its capital Buenos Aires, was the richest region in the world at the end of the nineteenth century, spurred on by migration and agriculture expansion. A century later, much of Buenos Aires is dour and downtrodden as the country experiences yet another economic crisis and bout of political turmoil. (On Friday, amidst riots which left 22 Argentinians killed, President Fernando de la Rue resigned and fled the government palace in a helicopter; I’d walked around the palace just a week earlier.) In contrast, many countries in Latin America are booming (Colombia, Peru, Uruguay, Brazil), mostly due to resources and an insatiable demand from China, but also stronger domestic consumption, improvements in education and good macroeconomic policies.

Nineteenth-century Latin America presents an especially useful comparison to twentieth-century Africa. Melisa Luc of the University of Barcelona showed how resources and weak institutions caused border wars (sound familiar?) between several Latin American countries in the nineteenth century, while Gerardo Sanchez of the University of Buenos Aires found large increases in regional inequality during Argentina’s Belle Epoque, suggesting a positive relationship between rapid economic growth and inequality. It’s perhaps this severe inequality, together with the devastating impact of the Great Depression, that would a few decades later ferment the rise of military rule and Peronism. Africa is experiencing its own Belle Epoque, also labelled ‘Africa Rising’. But, learning from the other country experiences, is this a sustainable growth strategy?

Dani Rodrik doesn’t seem to think so. In his latest Project Syndicate contribution, he argues that African countries lack the ‘productive dynamism’ that allowed Asian countries to achieve persistently high growth rates. “As in all developing countries, farmers in Africa are flocking to the cities. And yet, rural migrants do not end up in modern manufacturing industries, as they did in East Asia, but in services such as retail trade and distribution. Though such services have higher productivity than much of agriculture, they are not technologically dynamic in Africa and have been falling behind the world frontier.” In short, what African countries lack are “the modern, tradable industries that can turn the potential into reality by acting as the domestic engine of productivity growth.”

Why did this ‘productive dynamism’ occur in Asia and not in Latin America? And what can be done in Africa to promote such dynamism – and avoid the failures of Argentina?

Answers to these questions, I believe, lie in better comparative economic history.

*I’d like to thank my host, Luis Bertola, for the invitation to visit and for his kind hospitality. And a special thanks for last night’s perceto steak, which was braaied to perfection.


Written by Johan Fourie

December 14, 2013 at 13:07

5 Responses

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  1. […] Then there were those friends who were willing to show us around (and offered to pay for many meals): Erik and Jeannette Green, who invited us to join them in Bornholm (a magical Danish island off the coast of Sweden) for a few days during their summer holiday. And later, another invite to a traditional Swedish crayfish festival. And to Ellen Hillbom and her family, for a lovely Swedish lunch. (Read more about our stay in Lund.) In Colorado, we met up with Scott and Cara Leonard, for a wonderful dinner at the Blue Moose in Beaver Creek. (And for showing us how to fill up on gas.) In Santa Monica, Christine Ernst Bode not only invited us into her home, but took us to Los Angeles’ most famous sites, including Malibu, Hollywood, Santa Monica Pier and even the house Helanya’s grandparents had lived in many moons ago. In Tucson, Price and Pam Fishback invited us to the Desert Museum, ensured that we see the Arizona Wildcats play football and basketball, organised an outing to a haunted cowboy town, and several wonderful dinners. Many of his colleagues and students, notably Tiemen Woutersen and Taylor Jaworski (and his wife, Lila), continued the hospitality, inviting us to dinners around town and hikes in the Santa Catalina mountains. Our Airbnb host in Tucson, Ross Raderstorf, took us to baseball batting cages with his friend Toby (try the 90mph net!) and on a ride through the desert at sunset in his 1960-something Chevvie Caprice. Back in California, family-friend Lydia-Marie Joubert showed us Stanford’s impressive campus, while Liehann Loots gave us a tour around Google’s head office. Jan de Vries and his wife welcomed us into their home at Berkeley, and not only treated us to a lovely dinner, but also to an extensive campus tour and sage advice. (More of my thoughts on America here.) In Montevideo, Luis Bertola showed me how Uruguayans braai (not bad) and play football (not bad either). (I also wrote about my trip to Latin America here.) […]

  2. As a Peruvian-born American, I can tell you that “Peruvian productive dynamism or South-Africa’s” would never match Asia’s unless you have the perfec equation: CAPITAL (investment + tangible infrastructure) + PEOPLE (ideosincracy-policy). In Peru there was a huge influx of capital that better off the lives of the poor during the socialist years in the 70’s but failed because people’s potential outcome is always higher under capitalism. Today Peru is growing fast but it is based on natural resources not its people. Peru like South Africa lacks the Asian’s work ethic, education and cohesion that translates into competitive advantage. In addition, China’s fast growth does not depend on China but to the forces of capitalism looking for cheap labor. In the 80’s Mexico’s “maquilladora” economic sucess failed because US-manufacture found China cheaper instead. Neither the “higher environmental impact of transporting imports” nor the “having found a solution for illegal immigration” were enough to force US policy mantra clearly quoted by Marx “the capitalist would sell his mother for a pound.”

    Antonio Urbina

    December 22, 2013 at 00:39

  3. Muy bueno el post, very nice I men.
    I’m glad you had a nice experience here. I hope it will repeat.

    Javier Rodríguez

    December 20, 2013 at 03:52

  4. Excellent post Johan. A while ago Acemoglu & Robinson wrote about the possibility of South Africa becoming a Newly Latinamericanised country and I also wondered about what we can learn there. I think it was Paul Sharpe who also made some interesting points at the ERSA/FRESH workshop on agriculture and then industrial development in Asia. Your recommendation for comparative work is spot on.

    Waldo Krugell

    December 14, 2013 at 14:33

  5. Beautiful picture!

    Virginia Duran

    December 14, 2013 at 13:41

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