Economic Development in South America

Economic development can be described as a continued effort of a community that is aimed at enhancing the living standards as well as the local economy through the transformation of the capacity of the region to cope with changes that face the economy. South America comprises of different countries including Argentina, Brazil, Bolivia, Ecuador, Peru, Guyana, Suriname, Venezuela, Uruguay, Paraguay and Colombia (South America Map 5). Other countries of this region include French Guiana, Falkland Islands, Toboga, Trinidad and ABC Islands.

According to the IMF or the International Monetary Fund, before the economic boom of this continent in the 1990s, people knew South America for having the biggest debts in the world. These debts were related to political corruption that had spread to Brazil, Argentina and Venezuela as well as extreme borrowing. From the 1990s, there has been enormous economic development in South America. The economies of Peru, Venezuela, Argentina, Colombia and Uruguay have grown by over 8 percent every year (Calderón & Luis 2). However, it is anticipated that the growth rate of the Brazil economy will slow down in the future. Mostly, South America relies on exports. Brazil leads with overall exports that amount to 137.8 billion dollars. Chile takes the second position with exports that amounts to 58.12 billion dollars. Argentina comes third with total exports amounting to 46.46 billion dollars. There are various sectors of the economy that have developed at a rapid rate in South America.

Industrial centers have increased in South America with heavy industries being developed to complement different light industries which this region had initially concentrated on. Industrial growth was hindered by inadequate goal in South America. The region relies on the petroleum reserves that are found in Peru, Argentina, Colombia, Venezuela, Ecuador and Chile as the main fuel source. Natural gases have been developed gradually (Rathbone 1). Copper that is found in Central Andes areas of Chile and Peru is another resource which has led to the rapid economic development of South America. There are other mineral resources such as manganese and gold in Brazil, Bauxite in Guyana and Suriname as well as tin that is found in Bolivia.

Form 1970s to the late 1980s, disparity reduced in South America and this preceded the infamous liability crisis. There were tough years in the 1980s when inequality increased. There was a continuous increase in inequality within the economies of some countries during the 1990s. This is because this was the recovery time for most of their economies. This entailed the effects that the improvements that were market-oriented had on inequality since the impacts of personal transformation were mostly offsetting. Tax and trade were seen as being regressive while opening accounts was seen as progressive.

Good macroeconomic policies management including fiscal, exchange rate and fiscal policies led to poverty level’s reduction and economic growth. There are other reforms that can be related to advanced economies’ democratization that historically have not had interrelation with inequality reduction in South America. Such reforms include increased wages and salaries in the national income. Some South American countries that include Peru have had a reduction due to the deterioration of the institution of the labor market. Similarly, there is consolidated democracy in some countries like Bolivia, Guatemala and Peru. Primary as well as secondary level education access can be increased because it serves as a long-term trend of the region as well as the developing countries. Clearly, this shows that education level has not just increased due to education. Instead, South America’s participation in the worldwide trend that reflects changes in the international norms after the World War II has also contributed to this increase. Regarding the increase in the access to school facilities, this region has also not lagged behind for the last 50 years from 1955. In Brazil for instance, there was a basic education drive more so during the 1990s’ last half.

In South America, the basis of strong and inclusive growth has been laid down during the years that followed the economic crisis. There has been the adoption of policies that are friendly to the market in some countries. Other countries have included structural transformations whose aim has been to boost performance in the region. The gross domestic product of the region is 4 percent which is quite convincing. However, this is not adequate to meet the potential of this region. The potential of this region can support its modernization.

Colombia and Peru are some of the nations that are indicating a possibility of standing out. In this decade, Peru’s gross domestic product has tripled by registering an increase of 6%. The region has also experienced low inflation levels (International Monetary Fund 1). About 7.5 million individuals in this region are no longer living in poverty. This is equivalent to a one-quarter portion of the population of the region. Currently, about 40 people in Brazil are the beneficiaries of conditional money transfers. This country is also establishing new projects that involve the programs of alienating poverty. The main business organizations’ asset in Peru is the capacity to persist after the uncertainty years. The aim of the government is to diversify the economy, goods, people and services. Other countries such as Uruguay are applying observer status. In the developed economies, economic crisis means that interregional trade must be strengthened in South America. There are also several reform agenda that have been initiated in Mexico with the support of political forces.

When it comes to enhancing telecommunications and energy competitions, South America remains dynamic while enhancing reforms in taxes and monetary policies to improve its credit. Growth champions in this region are Panama and Peru. Mexico is also not lagging behind. When it comes to trade terms, Mexico, Peru, Chile and Colombia have spearheaded a major initiative. Free trade treaty of this region will lead to the eradication of about 90 percent of tariffs among the member countries. These countries are committed to ensuring that capital flows freely in the region.

Industrialization in South America is also taking place at a rapid rate (Rathbone 5). Several multinational firms in South America appeared in this decade and they are now international challengers. Companies in South America are becoming competitive in different industries. In addition to the Brazilian mining and oil giants Vale and Petrobas, there are other global challengers that include Cemex from Mexico. This has operations in 36 countries. There are also retail and food companies that include Mexico’s Bimbo, Brasil foods as well as Chile’s falabella. Chile’s airline and Brazil’s TAM have come together in a merger forming Latam. Companies in South America are facing ample challenges back at home. However, they are ready to face the challenges of volatile environments.

Generally, the region’s future will largely depend on the medium and small sized businesses as well as family-run businesses’ strength. This is because the participation of these businesses in terms of regional growth will be higher in the near future. Globally, South America is one of the success stories economically. The growth rate of most countries in this region is average internationally. These countries are paying down their arrears while promoting their international investments. Globally, the region appears to be the most uneven. For example, despite being an egalitarian country, the GINI coefficient of Uruguay is similar to Philippines GINI coefficient. Philippine is an imbalanced country in Asia.

Despite education being vital for development, a survey by the OECD international has shown that each school system in South America has been left behind. Schools and universities are not providing adequate skills to students yet these are what the employers require. Nevertheless, there are opportunities in this challenge since new education and investment policies can propel South America forward. Students and teachers should have measurements. For instance Mexico implemented a measurement system and it seems promising. Teachers who are ineffective should be trained. For instance, there is collaboration between Panama, Microsoft and Intel whose aim is to provide current technology to teachers while educating them about its use. Intercop is among the largest firms in Peru. This is operating schools and universities while the government increase education expenditure as well as offering scholarships for graduate to study at a global level.

There are studies that show that averagely, women are spending more years schooling than men. However, they get low pay and they have lower chances of attaining leadership positions. It is important for larger businesses to realize that they will have a competitive disadvantage if they continue practicing gender bias since they discriminate workers who are discriminated the most in the continent. Providing training opportunities on long term basis as well as preventative healthcare will enhance productivity of individuals during their senior years. A stable and open economy as well as dynamic labor markets can enhance investment and free enterprise. Reducing taxes will improve corporate growth while availing funds to community entrepreneurs and these will make income as well as help the poor.

The government should create a good environment that encourages investment by entrepreneurs. Transfer programs that include the Bolsa Familia in Brazil have been helping many people who have been living in poverty while implementing structures that are used by social entrepreneurs and non-governmental organizations. The population of Uruguay was about 3.3 million people in 2008 (McLeod & Lusting 5). The Gross National Product of this country is approximately 8260 US dollars. This is fairly good. There have been numerous changes in this country in terms of social, economic and political scenes. Uruguay’s economy recovered from economic recession that followed a period when this country was ruled by the military (South America Map (b) 3).

Nevertheless, the economy of Uruguay became worse immediately after the end of this period. This compelled the military to give the civilian population authority. People experienced democracy again in 1985. From that time, Uruguay economy has been experiencing sustained growth. However, there were times when the economy fluctuated and became unstable when compared to the economies of the neighboring states. The economic crisis of Argentina that occurred from 1999-2000 spilled its impacts over to the economy of Uruguay.

Most industries in South America are economically important. Majority of these industries produce consumer goods, food items and building materials. Importing and exporting is a significant factor to this region’s economy. The major bloc in this region is the Mercosul Common Market. This bloc has played a vital role of promoting trade among members in the region. The transport system of this region has also been developed to ease the transportation of services and goods as well as people in the region.

The main progress dimension is human capital. Education and health are the significant human capital sectors. Uruguay appears to be successful in the development of the education system. As of 2008 for instance, literacy level in Uruguay was at 98%. This placed Uruguay at the top position in the region as well as when compared to the other developed states in USA. It also ought to be noted that this country is among the nations that have maintained high levels of literacy over the last 30 years. Adult population’s literacy level was at 98.3 percent by 1975. According to the recent developments, Uruguay was the first nation to offer internet-based computers for free to children in primary schools. This was aimed at enhancing the passions and inclinations of every child.

Secondly, Uruguay’s health system has undergone several developments. This is why it is called the first South America’s welfare state due to its social security, education and health policies (UNDP 2). According to research, life expectancy has increased from 67 years to 75 years from 1960 to 2008. Child mortality issue has been handled properly in Uruguay since this is among the Millennium Development Goals. This can be seen from the decrease in infant mortality rate. Corruption problems that were facing the entire health care system during the 1950s caused a significant burden to the economy. Uruguay performance during the 1950s was exceptionally good.

In a nutshell, advancement in economic development in South America is remarkable. Several improvements are clearly visible in the health and education sectors in Peru and Uruguay, energy and telecommunication in Brazil, Argentina and Mexico among others.

Works Cited

Calderón, César and Luis Servén. The output cost of Latin America’s infrastructure GAP. [Santiago de Chile]: 2002. Print.

International Monetary Fund. Regional economic outlook: Western Hemisphere, Time to rebuild policy space. World Economic AND Financial Surveys, (2013) <http://www.imf.org/external/pubs/ft/reo/2013/whd/eng/pdf/wreo0513.pdf>

McLeod, Darryl and Nora Lustig. Poverty and Inequality under Latin America’s New Left

Rathbone, Paul. “A golden era fades as South America faces its crossroads.” Financial Times, 2013. Web. 26 Nov 2013. <http://www.ft.com/cms/s/0/f4b0deb4-3598-11e3-b539-00144feab7de.html>.

Regimes, 2010. Paper prepared for the 15th Annual LACEA Meeting, Medellin, Colombia: Universidad de Antioquia and Universidad Eafit.

South America Map (b). “Economy of Argentina” Maps of World, 2013. Web, 26 Nov 2013. <http://www.mapsofworld.com/south-america/economy/argentina.html>

South America Map. “Economy of Peru.” Maps of World, 2013. Web. 26 Nov 2013. <http://www.mapsofworld.com/south-america/economy/peru.html>

UNDP, Human. “Indices & Data | Human Development Reports (HDR) | United Nations Development Programme (UNDP).” Hdr.undp.org, 2013. Web. 26 Nov 2013. <http://hdr.undp.org/en/statistics/>.