Latin Lessons: How South America Stopped Listening to the United States and Started Prospering

Article excerpt

Latin Lessons: How South America Stopped Listening to the United States and Started Prospering Hal Weitzman John Wiley & Sons, Inc., 2012, Hardcover, 288 pages

REVIEWED BY JOYDEEP MUKHERJI

South America has been one of the rare pleasant surprises on the global economic scene in recent years. While developed countries struggle with debt and recession, much of the region maintains stability and impressive economic growth. Income is largely on the rise, and unemployment and poverty are on the decline. This is quite a change for a region that used to catch pneumonia whenever the developed countries caught a cold.

In Latin Lessons: How South America Stopped Listening to the United States and Started Prospering, Hal Weitzman, former Andes correspondent for the Financial Times, explores recent political and economic trends-mainly in the Andean countries-to analyze the developments that shaped present-day Bolivia, Ecuador, Venezuela, and, to a lesser extent, Peru. His highly readable book begins with a good review of South America's long and often sad history as a commodity-producing region.

The author's central argument is more nuanced than the title suggests. Much of South America is prospering, including the countries that are politically closer to the United States. The region has evolved to the point where it is increasingly shaping its own destiny and pursuing its own blend of economic policies and a foreign policy that is less centered on the United States.

Weitzman provides a concise summary of the momentous changes in Bolivia, Ecuador and Venezuela, where the radical Left came to power and implemented policies very different from the market-oriented economic approach of the Washington Consensus. As he shows, the rise of charismatic leftist leaders, such as Hugo Chávez in Venezuela, Evo Morales in Bolivia and Rafael Correa in Ecuador, was no accident. Their success refl ects the failure of previous leaders and previous economic policies to meet public expectations. The ground for radical change (including steps to politically incorporate marginalized communities) was set before these three leaders took power.

The nationalism that led Andean leaders to expel or restrict the role of foreign and private fi rms in the natural resources sector refl ects local experience as well as changing global trends. The persistence of abject poverty in places with a long history of mineral or oil production contributed, rightly or wrongly, to public support for nationalizations. "As the value of their [resource] exports rose dramatically, the people of the region naturally became impatient to experience the benefi ts," Weitzman writes.

At the same time, the rise of China-a massive consumer of South American commodities and source of external government funding-has boosted fi scal coffers. This, according to Weitzman, has made it easier for leftist governments to adopt a more hostile posture toward Washington, as well as toward the private sector. The collapse of the U.S. fi nancial system in 2008 and the global recession further undermined the prestige of market-based growth models in the eyes of many Latin Americans.

Weitzman is careful to point out that the radical Left's success in the Andes is due to more than just charismatic leadership. The governments of Venezuela, Bolivia and Ecuador have reduced poverty and expanded the reach of government services to previously excluded segments of society. This includes delivering health care, food, education, or subsidies to their political bases. However, recent improvements rest on two weak pillars.

First, public institutions remain weak and often corrupt. Hugo Chávez' policy of using the national energy company, Petróleos de Venezuela, S.A (PDVSA), to fund and deliver social services to the poor refl ects the weak state of government institutions. Leaders like Chávez may have expanded the role of the government, but they have not made government institutions more effective or less corrupt. …