From the early 1980’s, South America experienced a severe debt crisis, which diminished the countries’ ability to pursue independent economic policies. The rise in oil prices from 1972 and easy access to loans caused the Latin American countries’ foreign debt to quadruple during this decade. Thereafter, the loan sources dwindled; When raising new loans, the lending banks, via the World Bank and the IMF, demanded a restructuring of the economy.
The goal was macroeconomic stability and strong economic growth. The funds were removal of public subsidies, liberalization of capital markets, easier access to foreign investment, privatization and public savings. The wave of privatization has hit almost everywhere, and the problems of inflation and foreign debt are generally under control.
- Countryaah: Introduces South America as a continent, includes a full list of countries in South America, and provides location map of South America.
But the side effects from the process have been stressful, and in Argentina and Brazil, the lack of initiatives that could offset the growing social disparities has been striking.
Brazil is in every way the great power of the continent and has the world’s eighth largest economy. Argentina and Colombia follow with rankings among the top 30. Measured by degree of economic development, most of the countries belong to the so-called middle-income countries with Argentina, Brazil and Chile (the ABC states) together with Uruguay in the upper part. Then comes Venezuela, Colombia, Peru and Paraguay, while Ecuador and Bolivia are the poorest. Most often, Argentina and Brazil are considered the so-called NIC countries with a significant industrial development.
Until the mid-1900’s, South America consisted predominantly of agricultural societies, but as in the rest of the world, industry, trade, and the service industry have grown in importance.
Agriculture. Only 6% of the area can be cultivated, but in relation to the relatively small population, there is ample land available. However, the development of South American agriculture has been hampered by a very skewed land distribution, which is a legacy of colonial times.
Large parts of the best land are still owned by large estates with extensive cultivation methods. On the other hand, most farmers are employed on small farms with cultivation for their own consumption. A number of large farms are operated as plantations, whose crops have changed over time depending on economic conditions and prices in the export markets.
Effective modern large-scale agriculture, often with irrigation, is now found in southern and eastern Brazil, in parts of Argentina and off the coast of Peru. This is where South America’s significant exports of products such as soy, sugar, bananas and coffee come from. Agricultural production has increased a lot since 1975, and meat production has doubled or tripled in most countries. Cattle and sheep play a major role everywhere, and in the poorest areas also goats; especially the latter give rise to a strong wear on the vegetation.
Land reform is a recurring theme in every election campaign in South America, but in relation to the scale of the problem, very little has happened in most countries. A well-known initiative to acquire land is the construction of Transamazonica, a highway system through the Amazon that opened up the rainforest area and enabled the colonization of hitherto inaccessible areas.
Forestry. The Amazon is the world’s largest rainforest area. The forest resources are of local importance to the rainforest Indians and the settlers who have been allocated plots of land after the construction of roads in the areas. Extraction of precious wood, for export, takes place on a commercial basis. Brazil is one of the world’s largest producers of wood, pulp and paper, but much of the raw material comes from eucalyptus plantations outside the Amazon.
The fishery was greatly expanded and modernized after World War II. Some of the world’s richest fisheries are off the west coast, and in 1994 Peru and Chile accounted for 21% of the world’s fish catches. By far most of it is industrial fishing for fishmeal. Incidentally, fishing is of particular local importance; this also applies to freshwater fishing.
Mining. South America is very rich in minerals, and many ore fields were known even before colonization. In addition to gold and silver, there is copper, iron, tin, lead, coal and oil. Carajás in Brazil is the world’s largest iron ore mine, and in terms of tin and especially copper, a significant part of world production comes from South America, especially Chile and Peru. South America contains approximately 8% of the world’s known oil reserves; Venezuela is by far the largest producer.
Industry. Manufacturing employs 15-25% of the workforce in the various countries, and most have experienced the tendency, also known from the actual developing countries, that industrial employment is declining in favor of the service industries. Several countries’ development strategies have aimed to increase the production of their own industrial goods, and Brazil, for example, reached a degree of self-sufficiency of 95% in the 1990’s.
A large part of the industry is located in the capitals and the largest cities, and often the development has begun with the processing of own agricultural products. Other companies have emerged on foreign initiative, e.g. automotive industry in Argentina, Brazil and Venezuela. In order to promote foreign investment, free zones have been established and special rules have been adopted for foreign investors.
Transport. Along the Pacific Ocean runs the Pan-American Highway, which at Santiago sends a side road across the Andes to Buenos Aires. The Transamazonica Highway System is still under construction (2005).
Environmental problems. The arrival of whites in South America led to major encroachments on nature. Forest areas were constantly being felled and this development continues. At the coasts, the forests were replaced by plantations, and today the rainforest is reduced in favor of roads, urban facilities, agriculture, cattle breeding, mines and oil extraction.
For the extraction of gold, large amounts of mercury are used, which pollute the rivers. Oil extraction also creates major problems; Among other things, is Maracaibo lake biological death, and Indians in Ecuador and Peru have been destroyed their land by spills from oil pipelines.