1. A Changing World Latin American Problems Chapter 25, Section 1

2. How Can We Build? After WWII, many Latin American countries found it difficult to be economically stable After WWII, many Latin American countries found it difficult to be economically stable Thoughts: If we develop our own national industries, things will get better Thoughts: If we develop our own national industries, things will get better There will be more jobs There will be more jobs There will be more consumer goods for a growing population There will be more consumer goods for a growing population We will be less dependent on foreign goods We will be less dependent on foreign goods Reality: It’s paid for by getting loans from foreign countries and commercial banks Reality: It’s paid for by getting loans from foreign countries and commercial banks

3. How Can We Build? Thoughts: Let’s invite foreign corporations to our countries to do business Thoughts: Let’s invite foreign corporations to our countries to do business Capital and technology will lead to more industrialization Capital and technology will lead to more industrialization We’ll both be better off We’ll both be better off Reality: The relationship between these multinational corporations and the host countries become strained Reality: The relationship between these multinational corporations and the host countries become strained Many Latin Americans resented foreigners who owned important factories Many Latin Americans resented foreigners who owned important factories Many companies took their profits home instead of investing them in the host nation Many companies took their profits home instead of investing them in the host nation

4. Specific Latin American Problems Monoculture: Each country relies on just one or two crops or minerals for export (often grown on plantations) Monoculture: Each country relies on just one or two crops or minerals for export (often grown on plantations) Venezuela: Oil Venezuela: Oil Mexico: Oil Mexico: Oil Colombia: Coffee Colombia: Coffee Several Central American Countries: Coffee Several Central American Countries: Coffee Why would the reliance on monoculture be dangerous for an economy? Why would the reliance on monoculture be dangerous for an economy? Answer: if the price of the crop falls, the economy falls…if the price of the crop rises, the economy improves Answer: if the price of the crop falls, the economy falls…if the price of the crop rises, the economy improves

5. Import It Then… Some larger countries had success with import substitution Some larger countries had success with import substitution Countries would take certain goods they imported and replaced them with domestic options Countries would take certain goods they imported and replaced them with domestic options Favors were granted to businesses to encourage the manufacturing of these specific goods Favors were granted to businesses to encourage the manufacturing of these specific goods Tariffs were imposed on imports, making them more expensive Tariffs were imposed on imports, making them more expensive Where it worked: Mexico, Argentina, Brazil Where it worked: Mexico, Argentina, Brazil Goods produced: steel, heavy machinery, pharmaceuticals, and cars Goods produced: steel, heavy machinery, pharmaceuticals, and cars When it worked: from 1950 to 1978; it slowed in the mid-1980s When it worked: from 1950 to 1978; it slowed in the mid-1980s

6. Recession is bad… A worldwide recession hit in the mid ’80s leading to debt in many Latin American countries A worldwide recession hit in the mid ’80s leading to debt in many Latin American countries Part of why Mexico, Argentina, and Brazil were successful industrializing was because they took out large loans from other countries & banks Part of why Mexico, Argentina, and Brazil were successful industrializing was because they took out large loans from other countries & banks Increasing interest rates  huge debt  inflation  print more $  prices up  more inflation Increasing interest rates  huge debt  inflation  print more $  prices up  more inflation By 1980s, several countries had inflation rates over 1,000% By 1980s, several countries had inflation rates over 1,000% Combated by raising taxes, cutting spending and stopping aiding industries, reduce the # of gov’t workers, and controlled their wages Combated by raising taxes, cutting spending and stopping aiding industries, reduce the # of gov’t workers, and controlled their wages

7. Living in the New World NAFTA: North American Free Trade Agreement NAFTA: North American Free Trade Agreement A large free-trade zone is created between the U.S., Mexico, and Canada (no tariffs) A large free-trade zone is created between the U.S., Mexico, and Canada (no tariffs) Latin American population tripled from WWII to the mid 1990s (will grow through 2025) Latin American population tripled from WWII to the mid 1990s (will grow through 2025) The gap between rich and poor continues to grow The gap between rich and poor continues to grow Urban (city) populations grow extremely fast Urban (city) populations grow extremely fast New sewage systems, water mains, electrical lines, roads, and public transportation created for the cities New sewage systems, water mains, electrical lines, roads, and public transportation created for the cities Many countries also have slums where disease spreads Many countries also have slums where disease spreads

8. The Strength of Unity and Belief Roman Catholic Church is an enormous power base in Latin America, as over 90% of people in many countries are Catholic Roman Catholic Church is an enormous power base in Latin America, as over 90% of people in many countries are Catholic In 1968, Catholic Church is able to oppose welfare and oppressive economic and political systems while demanding human rights In 1968, Catholic Church is able to oppose welfare and oppressive economic and political systems while demanding human rights Organization of American States was also created to foster economic, military, and cultural cooperation among the hemisphere’s nations Organization of American States was also created to foster economic, military, and cultural cooperation among the hemisphere’s nations Basically, the OAS (35 countries strong) wants to keep others out of the Western Hemisphere Basically, the OAS (35 countries strong) wants to keep others out of the Western Hemisphere