Is the Spread of the Spanish Culture Responsible for Latin American Economic Failures?

In the discussion of Latin American economic difficulties, a common narrative often points to the cultural heritage of Spain as the primary culprit. However, a more nuanced analysis suggests that it is the colonial institutions inherited from the Spanish rule that perpetuate many of the region's challenges. Those institutions were designed to benefit a small elite rather than the broader population.

Understanding the Colonial Institutions

The exact origins of the poor economic outcomes in Latin America can be traced back to the colonial institutions established by Spain in the early and middle ages. When the English colonists arrived in Jamestown, they were unaware of the significant territory they were on, which had been the domain of a King named Wahunsunacock who controlled a large empire with lesser centralized control than the Incas.

These initial colonial institutions were extractive, meaning they were set up to enrich a small group of people, rather than benefitting the majority of the population. This extractive nature ensured that most of the population was excluded from the wealth creation process.

Even after gaining independence, Latin American nationsmaintained these institutionsfor the benefit of a specific elite group, typically the criollo class. This group was weak internally and prone to favoring foreign investors over their own populations to secure political and economic power.

Impact of External Influences

The inherent weakness of the local elites made them vulnerable to external forces. This is evidenced by numerous instances where local elites collaborated with foreign investors at the expense of their own populations. This collaboration often resulted in further concentration of wealth and economic benefits for the elites rather than the general population.

As a result, changes in the economic or societal structure were seen as a threat to the existing power dynamics, leading to a reluctance to embrace economic growth that could disrupt the status quo. This pattern has hindered genuine economic development in the region, as the extra wealth generated often fuelled more corruption and greed rather than sustainable prosperity.

Decisions Made by Local Leaders

The shortcomings of Latin American economies, cultures, and institutional frameworks are more a result of the unique historical and political circumstances faced by each country rather than a direct consequence of inherited Spanish culture. Many Latin American nations, after gaining independence, had the opportunity to adopt new and potentially more progressive systems from other countries like the United States. However, this opportunity was often ignored or squandered.

While it is fashionable to assert that U.S. foreign policies and commercial practices are to blame for Latin America’s issues, it is more accurate to say that the decisions to adopt or reject beneficial changes were made by the leaders and residents of the individual countries. Examples such as Panama’s separation from greater Colombia and the brief period of French control in Mexico illustrate that these decisions were not solely influenced by external factors.

Ultimately, the failure to implement progressive changes and the perpetuation of extractive institutions have led to the economic challenges that Latin America faces today. It is crucial to understand the historical context and internal factors at play to truly address these issues and pave the way for sustainable economic development.