Latin America: No Miracles in the Land of Wonders

Mexico has the Virgin of Guadalupe. In Colombia, the Virgin of Miracles is Tunja’s patron saint. In Lima, the Vincentian brothers have a parish dedicated to Our Lady of Lima. In Argentina, in the province of Salta, the Lord and Virgin of Miracles are worshipped. In Brazil, the country’s patron saint is Señora Abarecida, whose shrine dates back to 1717 in Villa de Caratingueta, where some fishermen first discovered her image.

Mexico has the Virgin of Guadalupe. In Colombia, the Virgin of Miracles is Tunja’s patron saint. In Lima, the Vincentian brothers have a parish dedicated to Our Lady of Lima. In Argentina, in the province of Salta, the Lord and Virgin of Miracles are worshipped. In Brazil, the country’s patron saint, Señora Abarecida, whose cult remains in the Villa de Caratingueta from 1717, is where some fishermen first found her image, after she had a wonderful catch. All over the Latin American continent we find virgins and lords of miracles.

However, Latin American economists and politicians have been less effective at producing economic miracles. It may be rightly said that economic science and political practice have little or nothing to do with popular belief.

Looking at the number of economic miracles, Robert Lucas of the University of Chicago, who won the Nobel Prize in Economics, and Professor Louis-Philippe Saenz of the University of South Carolina, a significant number of economic miracles in the world since the beginning of the last century. They define a “miracle” as an episode in which a country’s GDP or per capita value doubles from 10 years ago.

They compare performance against America’s economy, for a reason that can be explained with soccer. It is clear that a country plays well when qualifying for the World Cup, not just because local teams do well in national championships. Similarly, an economy does something significant when it closes its gap with the world’s most advanced economies, not just when its local businesses make money.

The devastating truth is that Latin America, the land of virgins and lord of miracles, did not have an economic miracle that occurred in Venezuela between the 1940s and 1950s.

The contrast with other regions could not be more encouraging: 11 countries in Africa had economic miracles. In Eastern Europe, 11 countries experienced them in the last 20 years. There were eight economic miracles in the Middle East, some of which are linked to it boom Tanker from the 1960s and 1970s, others as recent as 2005 (Iraq and United Arab Emirates).

In Western Europe, miracles occurred in the 1950s in almost all countries except the United Kingdom and Spain. Ireland at the turn of the century and Ukraine in 2007.

The Asian Tigers’ longest run of miracles was led by South Korea between 1971 and 1995, surpassing Japan’s miracle run between 1959 and 1974, an amazing three decades for that country. Singapore’s and Taiwan’s golden decades in the 1970s and China’s in the first decade of the 21st century.

Lucas and Sanz look for an explanation for the sudden growth: 1) access to technology, especially modern sectors that rapidly improve productivity and attract large numbers of people to industries and cities; 2) Demographic change, which leads to having fewer children and investing more in their education. Also, attractively, 3) women’s participation in the labor force participates more at the beginning of development, when the country is poor, they withdraw from the labor market, and when the country becomes rich, they go back to work. Overall and give it a significant boost.

Let’s return to the land of no miracles. What happened in Latin America? Why is a continent with few episodes of sudden and spectacular growth? From the end of the 19th century there was a marked difference between the two groups of countries. Argentina and Chile started the 20th century, more than any other region. Until 1940, Argentina accounted for 60% of US GDP per capita and Chile, 40% to 50%. Nothing like that is found in our continent.

At the turn of the 20th century, Venezuela and Mexico produced less than one-fifth of the average American. Not to mention Brazil, Colombia and Peru, productivity per person was close to 10% of that of North Americans.

Although amazing things were far from over, interesting things soon began to happen. Colombia and Peru grew in reverse between 1910 and 1940. Beginning in the mid-1930s, Venezuela’s spectacular flight did not stop until the 1960s, when the average Venezuelan’s income was 70% of US GDP per capita. ., the only Latin American nation to lift the trophy.

By the time Venezuela took off for the sky, the decline of Argentina and Chile had begun, until then the show of the region. Chile continued to decline until the mid-1970s and Argentina until the mid-1980s, both falling to a quarter of a North American’s productivity.

What happened to Brazil, Peru, and Colombia during that period? Brazil started from a low point in the 1940s and grew significantly until the 1980s. During those four decades, Colombia and Peru remained stable, fu or fa, neither growing nor falling relative to the productivity of the North Americans.

At that time, the U.S. Federal Reserve, in its quest to control inflation, went hand-in-hand with the global economic tsunami caused by rising interest rates, dubbed the “Lost Decade,” as it is now trying to do. .

Now, the worst hit is Venezuela, which lost everything it had gained since 1930 in the last two decades of the last century. Argentina also sank. Brazil, Chile and Mexico fell, but less dramatically. Peru fell to last place in the region. Finally Colombia, with Dog swimming, As locals say, it emerged unscathed from the debacle of the eighties, but, again, with a poor level of productivity per citizen.

Economic revival will have to wait for the 21st century. Indeed, the Chinese movement at the turn of the century raised the price of raw materials and the demand for everything the region produced. Economic growth occurred across the region between 2000 and 2014. China’s thrust has lifted all ships.

Special mention should be made of Chile, which quickly emerged from the crisis of the 1980s and underwent significant change (not a miracle by the above definition), and managed to maintain it for three decades. As of 2015, Argentina, Chile, and Venezuela led Latin America in terms of per capita wealth, close to 40% of the United States. They are followed by Brazil and Mexico with 30%. And Colombia and Peru closed the group with about 25%.

This story of steep ups and downs is far from over. In the middle of the last decade, China lost momentum, which affected demand for many raw materials. In addition, the breaking The US oil and gas crash caused crude oil prices to fall dramatically.

Venezuela slipped to last place in the region. Argentina and Brazil also fell, however, we can say that these three countries still lost a decade. The situation is so dramatic for Argentina and Venezuela that they lost not decades, but an entire century.

Recent history has been less severe for Chile, Mexico, Colombia and Peru. The four nations of the so-called Pacific Alliance managed to float, to varying degrees, without victory or defeat, of course, against the United States. Chile at the top, Mexico in the middle, and the other two a little below.

Looking for patterns of behavior in this difficult 120-year economic history, we can go back to Lucas and Chance to explain the absence of miracles and emphasize: 1) the lack of sustainability that sometimes reduces long-term prosperity. 2) Incomplete transitions from rural to urban areas, and many children to few children, have access to good education. 3) Limited access to technology and markets around the world, for non-core products. 4) Millions of women are trapped in family care work, keeping them out of the labor market.

Other authors decry the small stability of our institutions or the incomplete connection with international trade; others due to inadequate access to changing cutting-edge technologies; The Amazon, along with the Andes, the Isthmus of Panama, and the enormous distances that characterize the continent, make its internal integration very expensive and limit low-cost communication with the rest of the world. Finally some point to culture and politics.

What is up to this lamentation of Puerto Rico is conjecture. Host maidens and lords of miracles, while economists and political leaders could not find the key to take off in the region. Every hopeful episode, even if it spans two decades, is followed by a bust or, at most, an unbearably prolonged plateau. We stop pushing ourselves forward, prematurely stop the saplings of growth, or worse, sometimes make mistakes that give us half a century of progress.

Prayer is clearly not enough. But economic science and political practice were used. How to avoid loneliness for another hundred and twenty years? Can populism be put aside? Could there be another cargo superbike like the one at the turn of the century? Can so-called critical minerals, such as lithium and copper, make a difference to others? The phenomenon of nearby And will industrialization last in Mexico? Is there any future in the integration of the region as proposed by Lula, López Obrador or Pedro? These are questions we have to answer every day, but spend less time fighting against ideologies.

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