Latin America: There are no miracles in the land of miracles | The USA Print

Mexico has its Virgin of Guadalupe. In Colombia, the Virgin of Miracles is the patron saint of Tunja. In Lima, the Vincentian Brothers have a Parish dedicated to the Lady of the Miracle of Lima. In Argentina, in the province of Salta, the Lord and the Virgin of the Miracle are venerated. In Brazil, the patron saint of the country is Señora Aparecida, whose cult dates back to 1717 in the Villa de Garatingueta, where some fishermen first found her image and after her a literally miraculous catch. We find virgins and lords of miracles throughout the Latin American continent.

However, Latin American economists and politicians have been less effective in producing economic miracles. It will be rightly said that economic science and political practice have little or nothing to do with popular beliefs.

Looking at the numbers on economic miracles, Nobel Prize winner in Economics Robert Lucas, from the University of Chicago, and Professor Luis Felipe Sáenz, from the University of South Carolina, found that since the beginning of the last century throughout the There have been a considerable number of economic miracles in the world. They define a “miracle” as an episode in which a country’s GDP or value added per inhabitant doubled compared to 10 years ago.

They compare the performance against the economy of the United States, for a reason that can be explained with soccer. It is evident that a country is playing much better when it qualifies for the World Cup, and not only because the local teams do well in the national championship. Similarly, an economy is doing something remarkable when it closes its gap with the world’s most advanced economy, not just when its local businesses make money.

A devastating fact is that Latin America, the land of virgins and the lords of miracles, has barely a single economic miracle, which occurred in Venezuela between the 1940s and 1950s.

The contrast with other regions could not be more discouraging: in Africa 11 countries had economic miracles. In Eastern Europe, 11 countries experienced them, most in the last 20 years. In the Middle East there were eight economic miracles, some of them linked to the boom tanker from the 1960s and 1970s, and others as recent as 2005 (Iraq and the United Arab Emirates).


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In Western Europe, miracles occurred in the 1950s in almost all countries, with the exception of the United Kingdom and Spain. Ireland had theirs at the turn of the century and Ukraine in 2007.

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The Asian tigers exhibit the longest-lasting miracles, led by South Korea, between 1971 and 1995, a spectacular three decades for that country, even longer than that of Japan, whose miracle occurred between 1959 and 1974. Singapore and Taiwan had their golden decade in the 1970s and China around the first decade of the 21st century.

Lucas and Sáenz look for the explanation for the sudden growth in: 1) access to technology, especially the one that rapidly develops the productivity of modern sectors and massively attracts people to industries and cities; 2) the demographic transition, which leads to having fewer children and investing more in their education. And, fascinating, 3) the participation of women in the labor force, who participate a lot at the beginning of development, when the country is poor, then they withdraw from the labor market, and as the country becomes richer they go back to work en masse and give it a noticeable boost.

Let’s go back to the land without miracles. What happened in Latin America? Why is it a continent with so few episodes of sudden and spectacular growth? Since the end of the 19th century there was a marked difference between two groups of countries. Argentina, and Chile, which began the 20th century well above the rest of the region. Until 1940, Argentina enjoyed a per capita GDP close to 60% of that of the United States, and Chile, one between 40% and 50%. Nothing similar was seen on our continent.

At the beginning of the 20th century, Venezuela and Mexico barely reached a fifth of what an average American produced. Not to mention Brazil, Colombia and Peru, whose productivity per person was close to 10% of that of a North American.

Interesting things soon began to happen, though far from miraculous. Colombia and Peru grew vertiginously between 1910 and 1940. In the mid-1930s, Venezuela had a spectacular takeoff that did not stop until 1960, by which time the income of an average Venezuelan was about 70% of the GDP per capita of the United States. , the only Latin American country to lift that cup.

At the time that Venezuela took off towards the firmament, the decline of Argentina and Chile began, until then the show of the region. Chile declined until the mid-1970s and Argentina until the mid-1980s, both falling to a quarter of the productivity of a North American.

What happened in that period for Brazil, Peru and Colombia? Brazil started from a very low point in the 1940s and grew remarkably until 1980. During those four decades, Colombia and Peru remained stable, neither fu nor fa, neither growing nor falling compared to the productivity of North Americans.

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Right at that moment, the so-called “lost decade” arrived, hand in hand with a world economic tsunami caused by the increase in interest rates by the American Federal Reserve, aimed at controlling inflation, the same thing it is trying to do now.

Henceforth, the one that suffered the most was Venezuela, which in the last two decades of the last century lost everything it had gained since 1930. Argentina also sank. Brazil, Chile and Mexico fell, but less dramatically. Peru plummeted to last place in the region. And finally Colombia, with dog swim, as the locals say, it emerged unscathed from the debacle of the eighties, but, again, at an inauspicious level of production per inhabitant.

We would have to wait until the arrival of the 21st century for an economic renaissance. Indeed, the Chinese dynamism of the beginning of this century raised the price of raw materials and the demand for everything that the region produced. Between the year 2000 and 2014 there was an economic takeoff throughout the region. China’s push lifted all the ships.

Special mention should be made of Chile, which quickly emerged from the crisis of the 1980s and underwent a notable transformation (not a miracle, according to the aforementioned definition), and managed to maintain it for three decades. By 2015, Argentina, Chile, and Venezuela led Latin America in terms of value added per inhabitant, close to 40% of that of the United States. They were followed by Brazil and Mexico with 30%. And the group Colombia and Peru closed with about 25%.

This story of steep ups and downs has not ended. In the middle of the last decade, China lost dynamism, which affected the demand for many raw materials. Additionally, the fracking US oil and gas crashes plunged crude oil prices quite dramatically.

Venezuela plummeted to last place in the region. Argentina and Brazil also fell, although less severely, to the point where we can say that these three countries lost another decade. The situation is so dramatic for Argentina and Venezuela that it can be said that they lost not decades, but an entire century.

Recent history has been less harsh for Chile, Mexico, Colombia, and Peru. The four countries that made up the so-called Pacific Alliance managed to stay afloat without winning or losing against the United States, of course, at different levels. Chile above, Mexico in the middle and the other two a little below.

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Looking for patterns of behavior in this difficult economic history of 120 years, to explain the absence of miracles we could go to Lucas and Sáenz and emphasize: 1) the lack of consistency that cut short the sometimes long periods of prosperity. 2) The incomplete transitions from the countryside to the city, and from having many to few children, with access to a good education. 3) The limited access to technology and markets throughout the world, for non-primary products. 4) The entrapment of millions of women in family care work, which kept them out of the labor market.

Other authors blame the little consistency of our institutions, or the incomplete connection with international trade; others due to insufficient access to changing cutting-edge technologies; and others give weight to a challenging geography, which, with the Amazon, the Andes, the Isthmus of Panama and the enormous distances that characterize the continent, make its internal integration very expensive and limit low-cost contact with the rest of the world. Finally some point to culture and politics.

Hypothesis is what there is for this lament from Puerto Rico. Patron virgins and lords of miracles, at the same time that economists and political leaders have not been able to find the key to takeoff in the region. Every hopeful episode, even if it lasts for a couple of decades, is followed by a bust or, at most, an insufferably prolonged plateau. We stop what is making us progress, we prematurely stop the saplings of growth, or worse, we make blunders that sometimes return half a century of progress.

Praying is clearly not enough. But applied economic science and political practice either. How to avoid another hundred and twenty years of solitude? Can populism be kept at bay? Could there be another commodity supercycle, like at the beginning of this century? Can so-called critical minerals, like lithium and copper, among others, make a difference? the phenomenon of nearshoring and industrialization will stay in Mexico? Is there any future in the integration of the region, as proposed by Lula, López Obrador or Petro? These are questions that we must answer every day, but to which we spend less time than fighting over ideologies.

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