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Latin America Economic Overview, to the 1960s

In 1960, Latin America's twenty countries had a population of nearly 200 million, up from 62 million in 1900. Some of its people – largely Indians – were subsistence farmers not participating in the money economy. Indians living outside the Spanish or Portuguese speaking communities in Latin America numbered around 20 million.

Of those Latin Americans in the money economy, the average income was around 12 percent of what people earned in the United States. The highest average was in Venezuela, at 39 percent. The lowest was in Haiti, at 3.4 percent.

Life expectancy (at birth) at mid-century in Latin America was around forty-four years, compared to sixty-six in the United States and Canada. Good food and medical care were not available to many Latin Americans, and many were in dire need, including people in Colombia, Peru and elsewhere who were living by and from garbage dumps.

Some other Latin Americans had substantial wealth. Between 1935 and 1950, Latin America's economy had been growing at 4.5 percent per year – measured as Gross Domestic Product. Given the increase in population, Latin America's per capita economic growth was 2.5 percent. Latin's America's leaders were eager for faster growth. Watching recover economically, rather than complain about US economic penetration, as some would in the coming decades, they complained that the United States was ignoring their part of the world. Truman's Secretary of State, George C. Marshall, responded by promising them more economic assistance in the form of loans, for such things as hydroelectric and irrigation projects and for the building of transportation infrastructures.

The seeking of help from the United States continued in the 1950s. Investments by wealthy Latin Americans in their nation's economy was on the rise, but some Latin American governments considered this and their state's supply of money inadequate. Early in the century the British had led in investing in Latin America – the over-all return on British investments amounting to less than five percent per year. In the 1950s the United States became Latin America's leading source of foreign investment. US companies extended operations into Latin America, and Latin American governments were requiring US companies to have a certain percentage of local people as their employees and to pay taxes that amounted to more than 50 percent of the company's net profits. United Fruit and most US oil companies were among those paying around 66 percent of their net profits.

By 1962, however, per capita economic growth in Latin America had declined to zero. In the 1960s people were pondering why Latin America, with its vast natural resources, was so much poorer than the more advanced industrialized countries. Since Castro's revolution took power in January 1959, those who blamed Latin America's poverty Yankee imperialism had become more vocal. Those outside Cuba urging revolution were a small minority. Some Others wanted to advance trade. In the 1960s, roads were being built and improved, and the hauling of goods by truck within and between countries was increasing dramatically. At a meeting in Montevideo in 1960 a move had been made to cut tariffs – which had been inhibiting trade -- and by 1966, trade among the nine nations whose representatives had met in Montevideo had increased 95 percent.

Trade between Latin America and Communist nations was also on the rise. One fourth of this trade was between Argentina and the Soviet Union. The Soviet Union had become the largest buyer of Uruguay's wool, and it was buying copper from Chile. China was buying fertilizer from Chile. Communist Poland and Czechoslovakia were building ships and railway equipment for Latin American nations. And the Soviet Union and Cuba were trading partners.

During the 1960s, Latin America's average per capita economic growth rate was where it was around 1950: at 2.8 percent per year. There were complaints that Latin American agriculture was oriented too much for sales abroad rather than food for the people of Latin America – sales that benefited Latin America's rich, seen as in league with the foreign capitalists. The foremost problem for Latin America was, indeed, people not having enough food to eat. But the production of food being consumed in Latin America was increasing – not by moving onto land that had been used for export crops but by higher yields. This was mainly in the production of rice and beans – two of Latin America's major foods. The smaller, moderate sized farms growing these foods were adopting advanced farming practices.

Latin Americans were buying machinery and consumer goods from abroad – 40 percent of it from the United States. And Latin America was benefiting from demand for its products: coffee, timber, tin, beef, sugar, copper, nitrates, oil and other minerals. But trouble loomed. There was to be no great "great leap forward" economically, in Cuba or elsewhere. Latin America's population was growing. From 200 million in 1960 it would reach 484 million in 2000.


Copyright © 2001-2015 by Frank E. Smitha. All rights reserved.