Economic history of Latin America
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The economic history of Latin America covers the development of the Latin American economy from 2500 BCE to the start of the 21st century.
In the pre-contact era, Latin America did not have an integrated economy. The indigenous peoples, particularly the Aztec Empire in central Mexico and the Inca Empire in the Andean region, had complex socioeconomic structures. However, their economic and political systems were more isolated due to the difficulty of north-south movement. From the beginning of the 16th century until the early 19th century, the New World was largely under the dominion of the Spanish Empire and the Portuguese Empire. The prosperity rested on the production and exportation of two primary commodities: silver and sugar. After independence, Britain exerted influence through economic neo-colonialism and private investment.
World War I (1914–1918) had a disruptive effect on British and European investments. Germany lost its trade connections and Britain suffered significant losses as the United States emerged as the dominant economic power in the region. The negative impact of the Great Depression of the 1930s was reversed by Allied purchases in World War II. Latin America countries accumulated financial reserves that were used to foster industrial expansion through import substitution industrialization. In the 1970s the region took on debt to fuel economic growth and integrate into the global market. The prospect of export earnings led to large loans denominated in U.S. dollars to expand economic capacity. Foreign capital flowed into the region, creating financial links between developed and developing nations, while the dangers of this arrangement were overlooked. In the 1980s and 1990s, most governments implemented structural reforms. These reforms included trade liberalization and privatization, often imposed as conditions for loans by the IMF and the World Bank. The worst hit countries sent migrants to the U.S., and their remittances home became increasingly important.