Question

3. How did colonialism affect Latin America’s future development outcomes?  Describe some of the main products extracted during the colonial period and some of the institutions affecting the factors of production.  Discuss two institutions and how they affected future inequality and growth patterns in the region or a country of your choice.

Answer 1

In Latin America, colonialism created a period of inequality. After their independence, it did not cause immediate economic problems. But after some time, the effects were seen as an investment, credit, and trade were distributed. To make matters worse the people who took on the role of drafting the legislature had no previous experience and didn't know how to shape economic activity. This was followed by high levels of violence, political instability, and anti-trade policies all sabotaged economic growth and reduced state capacities below the already low levels that had characterized.
When Europe and the United States experienced an increase of industrialization, they realized the value of the raw materials in Latin America, which caused Latin American countries to move towards export economies. This economic growth also catalyzed social and political developments that constituted a new order. As the political situation stabilized toward the late nineteenth century, many governments actively promoted policies to attract capital and labor.

From the experience of Colonialism, the inequality which prevailed then is still present in large today. The inequality in Latin America is probably higher than anywhere around the world. They began to depend on trade as in the era of colonization with products they are good at and available in large numbers like sugar and silver. Christianity began to rise in Latin America as they were promoted during colonial times.

While during the colonial period, European institutions were mostly based on mercantilist principles. Spanish wanted gold and silver, for that to happen, they brought Africans and other non-christian people for cheap labor. They set up institutions to control this like the encomienda, which rewarded conquerors with the labor of particular groups of conquered non-Christian people. Another one was the Casa de Contratación (House of Trade) in Seville to control trade and immigration. It remained an integral part of Spanish political and economic policy during the colonial era. The precarious tax system and its weak redistributive power is one which lead to the rise of inequality in Latin America. And Spain and Portugese brought in extractive institutions which are considered bad for development, this also leads to the rise of inequality.

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