Question

Show how the United States’ balance of payments accounts are affected when a Bolivian citizen borrows two million from U.S. banks to buy American farming equipment.

Answer 1

America, as an area, has many states with different economic levels. Latin America's economy is an export-based economy that includes countries in the geographical regions of North America, Central America, South America and the Caribbean. A socio-economic model of the so-called Latin America was placed in the colonial period when the area was ruled by the Spanish and Portuguese empires. Until independence in the early 19th century, the colonial economy in Latin America flourished. Many parts of the region are favored by precious metals deposits, such as silver or tropical climates and near-shore sites, which allow for the development of sugarcane plantations. In the 19th century, after independence, many Latin American economies declined. By the end of the 19th century, much of Latin America was integrated into the world economy as an exporter. Foreign investment, construction of infrastructure such as railways, improvements in employment through foreign immigration, institutional strengthening and expansion of education have contributed to industrial growth and economic expansion. Many regions had developed economies, but "poverty and inequality were deeply rooted in Latin American society since the colonial era."

By 2016, the population of Latin America was 633 million, and Latin America's GDP in 2015 was $ 5.3 trillion. The main exports from Latin America are agricultural products and natural resources such as copper, iron and oil. In 2016, the Latin American economy contracted 0.8% after the 2015 recession. Morgan Stanley showed that the slowdown in economic activity was a combination of low commodity prices, capital flight and domestic currency market discord. The International Monetary Fund has indicated that external conditions affecting Latin America will worsen in 2010-2016, but will show a rise in 2017.

Historically, Latin America relied on exports, where money and sugar were the engines of the colonial economy. The area remains a major source of raw material and minerals. Over time, Latin American countries have focused on efforts to integrate their products into the global marketplace. The Latin American economy has two major economic sectors: agriculture and mining. Latin America has a large area rich in minerals and other materials. Also, the tropical climate and temperature of Latin America make it ideal for growing a variety of agricultural products.