Why South America did not develop as much as North America


There are four main reasons why South America did not develop as much as North America. To be clear, the meaningful contrast is between Anglo-America and Latin America, since Mexico and arguably Central America are part of North America, but they had histories similar to those of the South American countries.

First, the Iberian government and economic systems which were the legacy of South America, colonized by Spain and Portugal, were far inferior to the Anglo Saxon, Anglo American systems.

Spain and Portugal bestowed feudalistic political economies on their colonies, with a basically parasitic rentier class living off of the labor of peasants. (In some of those colonies, strictly hierarchical societies—such as that of the Aztec—may have preceded the arrival of Europeans.)


The colonial and postcolonial rentier class made little investment to boost the productivity of the local economies and blocked the development of liberal economies in their countries. By contrast, in its North American colonies, England settled entrepreneurial, property-owning farmers and merchants, who brought with them liberal political and economic orientations (in the European sense of the word liberal).

This was true more of the northern colonies of North America, since the southern colonies were based economically primarily on slave labor. In the English-speaking colonies, especially those in the north, the propertied white population invested heavily in economic development and fostered systems based on democratic elections (though participation was largely restricted until the 20th century to white males).

As a result of both this entrepreneurial orientation and the continuing economic and cultural connection to Britain, English-speaking North America was the first region of the Western Hemisphere to industrialize. Partly as a consequence, it developed a powerful financial sector, centered in New York.

Second, the Latin American countries, aside from parts of the Southern Cone of South America (Chile, Argentina, and Uruguay), exist in climate zones in which European patterns of agriculture and livestock rearing were not possible.

That meant that the agricultural innovations that advanced the economies of Europe and North America and encouraged the development of local commodity markets in the early modern period were not applicable in most of Latin America. Instead, they were largely restricted to cash crops for export and crops for local consumption that were less easy to transport and therefore market.

Third, the Latin American countries were separated by a number of physical barriers, both between countries and internally, in many cases. Steep mountains and tropical forests made land transport difficult to impossible.

This led to the fragmentation of the Spanish New World empire into many, mostly relatively small countries and hindered the development of trade both between and within countries.

This, in turn, hindered the development of internal markets and economies and focused trade on coastal ports aimed at the wealthy European and North American markets, which prolonged the economic dependence of Latin America on those markets for income and capital.

In the United States, the Appalachian Mountains are low-lying and crisscrossed by valleys, such that they did not offer a serious barrier to trade.

In Canada and the northern United States, the Great Lakes facilitated the development of the interior. By the time US and Canadian expansion had reached the more serious barriers of the western mountain chains, they had already developed robust economies and could both tap deep capital markets and make use of railway technology to overcome those geographic barriers.

Fourth, the early industrialization and economic development of the United States (and, to a lesser degree, Canada) allowed it to take a dominant position militarily and, increasingly, economically in the Western Hemisphere.

Increasingly, Latin American producers were dependent on US markets for their products and for the capital they needed to maintain production.

Repeatedly, from the 19th century on, the United States intervened militarily in Latin America to impose governments supportive of US economic interests. Often, military intervention was not necessary.

Latin American elites recognized their economic dependence on US markets and enacted policies favorable to US interests—policies often unfavorable to the development of economic autonomy and the improvement of living standards for the less-advantaged people of their countries.

It all came down to the fact that English colonies in North America had a much higher degree of political and economic freedom than the Spanish colonies in the South.

South America was essentially a feudal culture, bereft of democracy, did not have a large middle class, was mainly agricultural, and did not develop an impressive industrial base.

Spain, for instance, did not become a democratic country until after the death of Franco. And even then not immediately. Spain (and Portugal), in its occupation and administration of whole Latin American sub-continent for more than 300 years, kept the colonies divided according to their administrative preferences long after England had begun to give up on the rising North American colonies.

Simply, it’s a matter of Spanish colonial influence to the political-social-economic-cultural influences versus the English-Protestant influence.

With notes from Quora.com, Wikipedia, Historum.com