Markets, States and Neighbors

Where will Latin America  be 25 years from now?  Most commentators, probably with good reason, prefer to focus on  muchshortertimeframes. But extending the time  horizon allows us to see larger trendsshaping the region beyond the volatile cycles of changes in government. From my perspective, the trends look  troublesome.

Let’s start with economics. By  2034, Latin Americans will be richer than they are today—but not by  much. Latin America does not face the problem of a no-growth future. Rather, it faces the problem of a future with less growth: less than previously, less than most other developing regions of the world will experience, and less than most Latin Americans will expect.

For the past 30 years, Latin American economies have been under-performing relative to most other regional economies. Even during the fast-growth 2000s, almost every region in the world except Africa grew faster than Latin America. According to economic historian Angus Maddison, even if the world returns to the good years of the 2000s, Latin American economies by the 2030s will be further behind than ever. Latin America will register the largest gap with the richest economies of the world in its history, and also lag seriously behind China and Russia, economies that in the 1950s were far poorer than those of Latin America.

This “less growth” condition, in place since the 1960s, suggests that LatinAmericais sufferingfrom some low-grade fever that refuses to go away. What’s causing this fever? At the risk of being too reductionist, I propose that the most important cause is the uneven development of states and markets...