The Neo-Colonial Dependence Model and the Diverging Economic Paths of Chile and Argentina

By Isham, David | Indian Journal of Economics and Business, August 2012 | Go to article overview

The Neo-Colonial Dependence Model and the Diverging Economic Paths of Chile and Argentina


Isham, David, Indian Journal of Economics and Business


Abstract

By placing the economic paths of Chile and Argentina within a historical context, their current economic position can be better analyzed within five aspects of the NeoColonial Dependence Model. The Neo-Colonial Dependence Model asserts that less economically developed, former colonial-era colonies that technically have political independence, are still economically tied and largely dependent on More Developed Countries (MDCs). This parasitic relationship provides increased wealth and power to the MDCs. It is this economic power dynamic that weakens the socio-political economic status of the Less Developed Countries (LDCs) in a way that exacerbates the current economic hardships and further increases the power-and-control dynamic between LDCs and MDCs. Placed within the context of each countries historic beginning as Spanish Colonies, Chile and Argentina's economic data is tested against five hypotheses to ascertain whether or not these countries are still operating within the constraints of the Neo-Colonial Dependence Model.

SECTION 1: HISTORY OF CHILE AND ARGENTINA

History of Chile

The history of Chile and Argentina began along a similar path. In 1495, shortly after the discovery of the Americas, Spain and Portugal signed the Treaty of Tordesillas which gave ownership of everything west of Brazil to the Spanish Monarchy. The first Spanish inquiry into the north of Chile was in 1535 by Diego de Almagro. In 1540, this original inquest was followed by Pedro de Valdivia whom traveled with his men and founded the future capital of Chile, Santiago, in 1541. From this time, the Spanish desire for silver, gold, and other natural resources began asserting itself as the agenda within the region now known as Chile. The Spanish began a system known as 'encomienda', which, through the Spanish crown, granted certain Spanish elite the rights to forced labor and tributes from the indigenous peoples in their areas. This system laid the ground works for the exploitation of the indigenous people and others for use in the gold and silver mines in the region. Valdivia would later grant large swaths of land to those he approved of, recreating feudal-esque estates all across Chile. The now displaced indigenous peoples, many Spanish and native mixed lineage 'mestizos', were encouraged by Chile's aristocracy to set up tenant farms on their land, perpetuating the cycle of power imbalance and oppression.

Even though Chile was officially under the control of the Spanish Empire through the region's capital in Lima, Peru; nestled between a desert and the Andes Mountain range, the country was able to develop almost autonomously from Spanish control until Chile's revolution in 1818. Following the revolution, it went through several dictatorships and constitutions throughout the 1800's. Remarkably, its isolation allowed it to avoid much of the economic depression experienced by many of the other newly formed South American countries. Through this autonomy and relative prosperity, Chile quickly began developing its agriculture, mining, industrial, and commercial industries.

In the late 1800's and early 1900's, with land seized from Peru and Bolivia, the country gained further economic prosperity through the mining of nitrates that brought with it investors from Britain, Germany, and North America. This new influx of foreign capital empowered the working class and created a bourgeoisie society that began to challenge Chile's elite. The success was short lived, however, as the nitrate-mining economic bubble burst as the global industrialization of western powers began to demand more petroleum based products. Later, in 1914, the Panama Canal opened and furthered beleaguered the Chilean economy as large amounts of commercial traffic was diverted to countries further north, as ships no longer needed to round the horn of Chile's southern most end. These hard economic times weakened the working class once again, and perpetuated the power of elite Chilean landowners and politicians. …

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