19 th C Latin America: An Assessment Lecture # 5 Week 3

Structure of this class Some Trends: Colonial and 19 th C Factor endowments Access to trade Institutional constraints Inequality Concluding Remarks

Latin America became underdeveloped between early 18 th C until late 19 th C

Factor endowments Did not matter much during colonial period when: Natural resources lay dormant/inaccessible Indigenous populations died While any exploitable resource which could profitably turn into silver and gold attracted both private greed and official attention Vast areas remained unexploited and ungoverned Few settlers mostly on islands on seacoast or navigable rivers Importation of slaves in those areas

Slaves did not end up where marginal productivity of labor was highest

Access to trade Positive correlation between export performance and GDP

Institutional constraints: - Political risk - Lack of well-defined property rights, corruption, the Church.. - Small provision of public goods  unclear relationship between GDP per head and tax revenues

Inequality Until the end of the 19 th C that Latin America became more unequal relatively to the developed world Although equality was proclaimed upon independence, disguised tributo prevailed, unequal land distribution….etc Railroad construction gave access to markets to powerful outsiders Legal status of women deteriorated in the 19 th C Inequality prevailed in more productive areas and eras Although there are particular cases, in general: Kuznets’ predictions seem to apply to Latin America

Concluding remarks Stagnation up until the late 19 th C With few exceptions (Argentina and Cuba) stagnation due to institutional and physical barriers Beginning in the last quarter of the 19 th C transport infrastructure helped Latin America to overcome physical barriers Institutional changes in the last quarter of the 19 th C began to take place  “Golden Age”  Next Class: Topic 6 (see syllabus pls)