What has been the impact of export led development in Latin America?

Gunder-Frank, Galeano


Claim: Export led development has left Latin American industry dependent on the decisions of foreign capitalists, who have extracted natural resources, ruined the environment, exploited workers, and sent all the profits overseas. Consequently, any industrialization, or modernization, that occurred during this massive suck of wealth was fleeting and ultimately hindered any chance of economic independence for Latin America. As Galeano wrote, “development has only developed inequality” (Galeano 3).



(i)             “Northeast Brazil was one of the richest area and is now its poorest” (Galeano 6). In fact, as Galeano wrote, “the Brazilian Northeast is today the most underdeveloped area in the Western Hemisphere” (Galeano 63).


Š       While, the “sugar-ocracy” industrialized NE Brazil for the production of sugar cane, “development” only lasted as long as demand and profits for sugar remained high. (Galeano 61).


Š       At the end of 16th century there were 120 sugar mills in NE Brazil, but nothing else, plantation owners imported all food from abroad (Galeano 63).


Š       Once the sugar demand profits dropped, NE Brazil suffered the same fate as cacao in Venezuela, rubber in the Amazon, and coffee and fruit in Colombia and Ecuador


Š       The more the international market desire a product, the greater the inequity and poverty it created in Latin America.


(ii)            “When we examine this metropolis-satellite structure, we find each of the satellites…serves as an instruments to suck capital or economic surplus out of its own satellites and to channel part of this surplus to the world metropolis” (Frank 6).


Š       Capitalists acted like parasites that sustained their growth from a healthy host by draining all of the host’s food and strength to sustain its own growth.


Š       As Che Guevara said, “The nation that buys commands, the nation that sells services; it is necessary to balance trade in order to ensure freedom; the country that wants to die sell only to one country, and the economy that wants to survive sells to more than one” (Galeano 71).


(iii)           “To each area has been assigned a function, always for the benefit of the foreign metropolis of the moment, and the endless chain of dependency has been endlessly extended” (Galeano 2)


Š       Latin America’s inability to exploit it own cornucopia of natural resources has invited the assistance of foreign capitalists profiteering from Latin America’s “underdevelopment”; in the process, retarding Latin America’s own domestic economy. European finished goods inundate the Latin American market, which reduces the necessity of domestic manufacturing. The advantages of the European investment in extracting precious metals and minerals continually require less labor, while profits doubles, and triples.


Warrant: This has left Latin America in perpetual “un-development” that does not correlate with the wealth the continent has made since it “discovery” in 1492. Latin America’s economy has become too dependent on European and American political decisions and economic growth.



Counter Argument:

(i)             Industrialization and capital from foreign capitalist was the only means to spur domestic development in Latin American because Latin America was too “backwards” to exploit its own wealth.


Rebuttal: 1950s LA supplied 4/5 of world’s coffee, since US cheap, low quality coffee cut-in


Š       Galeano wrote, “Brazil is the world’s largest [coffee] producer, getting about half of its export income from coffee” (Galeano 97).


Š       Coffee elite realized it was cheaper to pay laborers substance wages than use slave labor; coffee “quickly ruined [Brazil] by a plant whose destructive form of cultivation left forested razed, natural reserves exhausted, and general decadence in its wake” (Galeano 97).


Š       In Columbia, only 5% of coffee profits account for wages (Galeano)


Š       Galeano: coffee did not produce peace, but only setup the infrastructure, the industry in Latin America, but the coffee oligarchy was still in charge and foreign control of industry only grew stronger. Malnutrition continued despite coffee, and social inequality remained the same (Galeano 104).


Š       Coffee did not required more laborers, it did not create new jobs; coffee often requires fewer workers, who were paid less.

Š       “Juan Valdez smiled in the ads, but in fact atomization of the land is steadily forcing his living standards down and making it easier for the Federación National de Cafeteros…to manipulate the situation” (Galeano 99).


Counter Argument:

(ii)            Why did England's American colonies develop its own industry after independence, while its Latin American colonies remain un-developed?


Rebuttal: USA’s Homestead Act of 1862 was the opposite of Brazilian land laws; American pioneers were granted land to settle, at the expense of indigenous Indians, which made   the Western US habitable and profitable.


Š       Later, farmers in the West attracted more settlers and avoided unemployment from farm jobs; it also created industrial development that was sustained with internal and Eastern markets (Galeano 131).


Š       The Brazilian inland was expanded by wealthy landowners, who were followed with braceros, or indentured laborer. There was no Brazilian Homestead Act; there were no independent farmers, and no internal markets.


In North American, the Mayflower came full of pioneers seeking to establish the roots of their former lives in the New World; in contrast, in South America boats of explorers and capitalist came to make money (Galeano 132).


Š       The 13 colonies served as an outlet for the surplus laborers of expanding European capitalism


As Galeano stated, the United States had the benefit of not being born important because the 13 colonies had no gold or iron or copper, no desirable exotic foods, or raw materials needed for industrialization; it has a European mild climate and poor land for massive agricultural production. The US colonies were born “unimportant”.


Š       13 colonies not important, so it allowed for the autonomous development of industry, and preserved capital, investment domestically, which was not sent abroad.


Š       LA never expanded, it was fragmented because of the one-way relationship; US commerce grew in a concentric form that spread across the entire continent (Galeano 133)

Work Cited


Galeano, Eduardo. Open Veins of Latin America: Five Centuries of the Pillage of a Continent.     Translated by Cedric Belfrage. New York: Monthly Review Press, 1997.


Gunder-Frank, André. “The Development of Underdevelopment.” In Dependence and         Underdevelopment: Latin America ‘s Political Economy, by André Gunder-Frank, James Cockcroft, and Dale Johnson, 3-17. Anchor Books, 1972.