From the early 1980s, South America experienced a severe debt crisis, which diminished the ability of countries to pursue independent economic policies. The rise in oil prices from 1972 and easy access to loans led to a 15-fold increase in Latin American debt abroad during this decade. After that, the loan sources disappeared; When borrowing new loans, the loan 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 for foreign investment, privatization and public savings. The wave of privatization has broken through almost everywhere, and the problems of inflation and foreign debt are generally under control.
But the side effects of the process have been stressful. in Argentina and Brazil, the lack of initiatives that could offset the growing social differences has been conspicuous.
Brazil is in every way the world’s great power and has the world’s eighth largest economy. Argentina and Colombia follow with ranking among the 30 largest. In terms of economic development, most of the countries belong to the so-called middle-income countries with Argentina, Brazil and Chile (ABC states defined by Countryaah) 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 regarded as so-called NIC countries with significant industrial development.
|Country||Total GDP (million US dollars)||Agriculture’s share of GDP (percent)||Manufacturing industry’s share of GDP (percent)|
|Argentina||518 475 (2018)||6.1 (2018)||12.8 (2018)|
|Bolivia||40 288 (2018)||11.5 (2018)||10.3 (2018)|
|Brazil||1 868 626 (2018)||4.4 (2018)||9.7 (2018)|
|Chile||298 231 (2018)||3.6 (2018)||10.6 (2018)|
|Colombia||330 228 (2018)||6.3 (2018)||11.3 (2018)|
|Ecuador||108 398 (2018)||9.2 (2018)||14.2 (2018)|
|Guyana||3 610 (2018)||15.4 (2017)||3.1 (2017)|
|Paraguay||40 842 (2018)||10.5 (2018)||19.5 (2018)|
|Peru||222 238 (2018)||6.7 (2017)||12.8 (2017)|
|Suriname||3 427 (2018)||12.6 (2017)||14.6 (2017)|
|Uruguay||59 597 (2018)||5.6 (2018)||11.7 (2018)|
|Venezuela||482 359 (2014)||5.0 (2014)||12.1 (2014)|
Until the mid-1900s. South America consisted predominantly of agricultural societies, but as in the rest of the world, industry, trade and service industries have grown in importance.
Agriculture. Only 6% of the area can be cultivated, but compared to the relatively few population there is plenty of land available. However, the development of South American agriculture has been hampered by a very distant distribution of land, which is a legacy of the colonial era.
Much of the best land is still owned by large estates with extensive cultivation methods. In contrast, most farmers are employed in small-scale farming with their own consumption. Some large farms are run 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, among other things. in southern and eastern Brazil, in parts of Argentina and on the coast of Peru. Especially from this comes South America’s significant export of products such as soy, sugar, bananas and coffee. Agricultural production has increased greatly since 1975, and among other things. for example, 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 strong wear and tear on the vegetation.
Land reform is a recurring theme in every election campaign in South America, but compared to the extent 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 the rainforest area and enabled the colonization of hitherto inaccessible areas.
Forestry. The Amazon is the world’s largest rainforest area. Forest resources are of local importance to the rainforest Indians and the settlers who have been allocated land after the construction of roads in the areas. Extraction of hardwood, i.e. for export, takes place on a commercial basis. Brazil is one of the world’s largest producers of wood, wood pulp and paper. eucalyptus plantations outside the Amazon.
The fishery was greatly expanded and modernized after World War II. Some of the world’s richest waters are off the west coast, and in 1994 Peru and Chile accounted for 21% of the world’s fish catch. The vast majority are 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 are copper, iron, tin, lead, coal and oil. Carajás in Brazil is the world’s largest iron ore mine, and with regard to tin and especially copper, a significant part of world production comes from South America, especially Chile and Peru. South America holds approx. 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 trend, which is also known from the actual countries, that industrial employment is declining in favor of service industries. The development strategies of several countries have been aimed at increasing the production of their own industrial products, and for example Brazil reached a 95% self-sufficiency rate in the 1990s.
A large part of the industry is located in the capitals and the largest cities, and often development has begun with the processing of own agricultural products. Other companies have emerged on a foreign initiative, including automotive industry in Argentina, Brazil and Venezuela. In order to promote foreign investment, free zones have been set up and special rules have been adopted for foreign investors.
Transportation. Along the Pacific is 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 the whites to South America caused major interference with nature. Forest areas were constantly felled and this development continues. On the coasts, the forests were replaced by plantations, and today the rainforest is reduced in favor of roads, urban plants, farms, cattle breeding, mines and oil extraction.
Large quantities of mercury are used to extract gold, which pollute the rivers. Oil extraction also causes 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.