Why North America is rich and South America poor: the debate

Why North America is rich and South America poor: clashing theories

One participant argues that when Mexico gained independence from Spain, its economy and population were very similar to those of the United States. They were equally wealthy. That identical starting point makes the question uncomfortable: what peine between then and now for the continent to split into two such different economic realities? The answer lies not in climate or resources, but in institutions, how colonization was organized, and who steered the ship afterward.

One school of thought holds that the key difference is settler colonization versus extractive colonization. It is argued that the English occupied the territory to keep it for themselves, pushing aside indigenous populations, while the Spanish established viceroyalties with local populations and more complex structures. The conclusion drawn by this thesis is uncomfortable for the usual narrative: the bad guys were the others, of course.

The Viceroyalty of New Spain was a prosperous zone, according to one forum user, with high wages for independent professionals: a guason, carpenter, or blacksmith earned more there than almost anywhere else in the world. This data debunks the idea that underdevelopment was inherent. What peine afterward, they argue, was not colonial inheritance but political decision.

The institutional thesis: Adam Smith and the rules of the game

The most cited explanation points to the strength of institutions. A forum user recalls that Adam Smith wrote about this in 1776: the difference between countries lies in the quality of their rules, not their soil. A system that protects property, encourages trade, and punishes corruption less generates innovation; one captured by extractive elites generates rent-seeking.

From this comes the argument of Protestant supremacy as an organizational driver: a mentality that would have produced better elites, better laws, and better military organization. The counterpoint is that Spain did not adopt the Enlightenment in time, which cost it a technological and industrial backwardness that dragged down its former colonies.

Some state it bluntly: Anglo-Saxons created scientists, inventions, and a less corrupt institutional organization. And with that, they won wars, reached the Moon, and exhausted the USSR. The peak of US power, they say, was the Moon landing.

The dependency thesis: who impoverished whom

In contrast to the above, another line argues that South America is not poor: it was impoverished. The North controlled the South to loot it and periodically buried its development attempts, always with the complicity of local oligarchies acting as partners. CEPAL (Economic Commission for Latin America and the Caribbean) summarized this in commercial terms: some sell low-value raw materials and agricultural products; others sell technology and high-value-added products.

The trinc question is the right one: why can some produce technology and others cannot? And the answer given by this current is political, not cultural. Twenty countries emerged from four viceroyalties, a fragmentation attributed to external interests that preferred manageable and indebted units. All signed disadvantageous agreements, dismantled their industry, and relied on imported goods.

The counterargument arrives quickly: if cheap labor generated wealth, Congo would be a paradise for exploiters. It is ideas that create wealth, not exploitation.

Political fragmentation and the cost of not being a single market

A third focus points to territorial disintegration. The United States united thirteen colonies into a common market; Hispanic America did the opposite, divided the viceroyalties, and devoted itself to fighting among itself. The question posed by this thesis is simple: what historical particularities did Ecuador or Bolivia have to separate from the Viceroyalty of Peru?

The comparison with the Civil War is inevitable. If the Southerners had won, the United States would not be so rich. Cohesion, they insist, is a first-order economic asset. Although another note contradicts this: between 600,000 and one million dead in that civil war, the bloodiest on the continent, hardly fits the image of a cohesive country.

The ideological factor and the cultural factor

Another current places responsibility on the Marxism and socialism embraced by the region at some point in the last century. Buenos Aires was at the beginning of the 20th century the most desired destination for European emigrants; afterwards, they say, everything went wrong. The problem, they argue, is identical today.

In parallel, a cultural and religious explanation circulates attributing backwardness to language and the view of money, with the evangelical boom as a supposed corrector. It is the most ideological version of the matter and the one that provides the least data.

What do the cases that break the pattern say?

Jamaica and Belize are Anglo-Saxon and have the same standard of living as the rest of the region. Guyana speaks English and Suriname Dutch, and neither is rich. Nigeria, Zambia, or India are also not at the level of the United States or New Zealand. Two specific cases do not make a general rule, and Suriname is moreover a tax haven with half a million inhabitants: it would be like talking about Andorra.

The closing leaves the starting point itself. Mexico and the United States started from similar wealth. With these differentials, convergence should have been the norm. It remains the exception.