Why Latin America Is Poor

Why is Latin America so poverty stricken? Latin America is considered part of the “developing world,” which connotes that it is generally a poor region. In this paper I aim to explore reasons as to why Latin America is generally so poor by examining various aspects of Chile, Cuba, and Jamaica: governmental systems, economic systems, natural resources, and income inequality. I chose to do my research through the lens of average GDP per capita for each country. For the purpose of this paper, the monetary data will be recorded using the US Dollar value. I chose these three countries intentionally, as they differ in their economic systems, governments, locations, and GDP per capita. Chile is considered one of the most democratic and well developed …show more content…
Generally, there is a belief that democracy is connected with development; and furthermore, economic development needs to be present in order for democracy to be established. According to the Council on Foreign Relations, democracies have consistently brought about higher economic performance than autocracies. Furthermore, democracies also have superior levels of social development, with higher literacy rates and life expectancy (Democracy and Development). The governments of Chile, Cuba, and Jamaica seem to be somewhat consistent with this claim since Chile, a democracy, generates a higher GDP per capita than either Cuba or Jamaica. This data focuses specifically on a democratic republic, a communist dictatorship, and a constitutional …show more content…
As Ashley Davis-Hamel tells us in her journal titled Successful Neoliberalism?: State Policy, Poverty, and Income Inequality, Chile began to shift towards neoliberalism during the rule of General Pinochet, after a short experience with socialism while Salvador Allende was in power. Chile experienced two “economic miracles” under Pinochet’s rule, yet these economic booms were heavily influenced by outside factors, such as outside investors. Pinochet heavily reduced government spending on social programs, and embarked on a wave of privatization. Post Pinochet, Chile saw a shift to more equitable economic practices. Although Pinochet made it difficult to change the constitution and the system, his successors were able to implement stronger social welfare programs and were able to produce a growth in real wages. Only with the global recession did Chile see a growth in poverty rates. Davis-Hamel concludes that the neoliberal policies put in place by Pinochet proved to be ineffective, and the balance between neoliberal policies and full government control has proved to be very powerful for Chile’s economic growth