Economies of Latin America

Command vs. Market *Read over the book (P. 103) and define the following: Market economy- Command economy- Mixed economy- Communism-

Socialism If you look at 10 different sources for a definition of socialism you’ll likely get 10 different definitions. In general, it is the idea of more government involvement in the economy than a mixed economy, but less control than communism.

Socialism (continued) Socialisms goal is the more equitable distribution of wealth and opportunity. To get there socialist governments often: Use more aggressive redistribution of wealth through taxation or confiscation of property than a mixed economy. More likely to use price controls Often have public ownership (gov. control) of key industries, such as oil

Latin America has always had a tendency to flirt with socialism, sometimes going from very free market economy to socialism or vice-versa.

Three Case Studies Cuba: One of the few remaining communist countries (close to being a full command economy). Very little private enterprise. Guaranteed employment, health care, education, and food ration cards. *The downside, very little opportunity for upward mobility.

2. Chile- Once a failing socialist state under Allende, the country went very free market after a military coup replaced the socialist government. Today it has one of the highest standards of living in Latin America and ranks above the U.S. on the economic freedom index

3. Venezuela- Strongly socialist country relying mostly on one commodity, oil. Venezuela employs strong price controls. The government also controls the oil industry and redistributes wealth from oil revenues.

Many South American countries rely on the export of a limited number of commodities like metals or oil. This means their fate will rise and fall with the market value of those commodities.