Our discussion of Latin American
geography would not be complete without a large emphasis on the region’s
remarkable abundance of natural resources.
Traditionally, Latin America has
been seen as a region rich in natural resources and an abundant labor force,
but scarce in capital. With increased
globalization, the demand for an unskilled labor force and the production of
labor-intensive products is continually expanding. However, this image of Latin America as
simply being capital poor with an abundance of unskilled workers is not
entirely accurate. Latin America’s true
specialty lies in its huge endowment of natural resources (Gavin and Hausmann 1). During the
1990s it started to become clear that the traditional view people had of the
region was very misleading and leaves out import aspects of Latin America’s culture
and identity. This new appreciation can
be attributed (at least in part) to an influential paper written by Sachs and
Warner, which was the first to make an assessment of the association present
between a region’s – or country’s – resource abundance and its economic growth (Gavin
and Hausmann 1). During this time,
people started gaining a new appreciation for the region’s geography and its
natural resources; realizing the impact these things have on other parts of the
world. The impact of this was clearly
felt within several Latin American countries as they began to take advantage of
global demand for their natural resources, leading to economic liberalization
which was followed by growth in foreign investment and the export of
natural-resource intensive products – while the growth of labor-intensive
manufacturing began to slack off (Gavin and Hausmann 1).
Further research by Gallup and
Sachs (1998) has revealed more evidence showing a correlation between a
country’s resource allotment and
geography with its growth rate. In both
cases, evidence points to a slower growth of countries with a wealth of
resources, as compared to those resource-poor emerging economies, such as the
“Asian Miracle Economies.” Convincing
evidence has been provided to support the claim that geography has a
substantial impact on this relationship (Gavin and Hausmann 1). For instance, tropical countries, landlocked
countries, and those countries located the greatest distance from major
economic centers, show significantly slower growth rates than those with more
temperate climates, coastal locality, etc. (Gavin and Hausmann 2). Why?
Well, an obvious connection can be made between a country’s economic
growth and its proximity to economic centers; those countries with a coastline
also have the obvious advantage over landlocked countries because of their
ability to ship export goods to overseas markets, further expanding economic
opportunity. But the question still
remains concerning the correlation between climate and economic growth. While Gavin and Hausmann pose similar
important questions about what this all means for Latin America, they fail to
provide a clear definition of the reasons as to why this relationship between
climate and growth is present. I feel
there are several important factors contributing to this phenomenon, including
the type of resources provided by these regions as well as the image that
society has constructed about the ‘3rd World Countries’ common to the region. The distribution of income also has a
significant impact on this topic. Income
inequality, historically has been a serious issue within many Latin American
countries. One factor brought forward by
Gavin and Hausmann in their research is a combination of economic growth and
investment in human capital; investment in human capital, in the form of
education, shows a highly positive correlation with economic growth (2). Thus, a connection can be made between
resource-rich economies and slower growth rates via a shortfall in education
and an unskilled labor force.
In summary, this discussion made an
attempt to take a deeper look into the correlation between Latin America’s
geography (in the form of its abundant natural resources), globalization, and the
impact this has on Latin America’s economic growth. As you can see, it is impossible to
investigate one topic without relating it to the others, which serves to
demonstrate how all these aspects of a region are so closely tied
together.
If this discussion concerning the
role of natural resources in Latin America’s economy has intrigued you as much
as it has me, the full paper is available at the following link:
http://hdl.handle.net/10419/87909