Latin American Economic Development: 1950–1980

Abstract

In the thirty years between 1950 and 1980, Latin America experienced rapid growth. During this period, output expanded at an annual rate of 5.5% with per capita increases averaging 2.7% a year. Table 1 provides country details. The star is clearly Brazil, whose share in regional product increased from less than a quarter to more than a third. At the other extreme are two groups: the Southern Cone (Argentina, Chile and Uruguay), whose mid-century leading position in the region was eroded by below average performance; and a group of smaller countries, including several in Central America. On average, Latin America's record, viewed from an immediate post-World War II perspective, is impressive. It far exceeded the target of the Alliance for Progress implemented in 1961, which called for an annual rate of 2% per capita. It also compared very favourably with European per capita income growth in the aftermath of the Industrial Revolution, which was 1.3% from 1850 to 1900 and 1.4% between 1900 and 1950. Long-term US economic growth has been at 1.8%.Yet two factors combine to make the 1950–80 Latin American growth performance seem less positive. One is its dramatic reversal in the 1980s, a period in which GDP per capita fell by 8.3%. By 1989, with the exception of Brazil, Chile, Colombia and the Dominican Republic, per capita GDP had fallen below its 1980 level. At the extreme, Venezuela, Nicaragua and El Salvador show levels below those attained in 1960. The 1980s have truly been a lost decade and thus one tends to underestimate the earlier achievement.