Latin American democracies in a vicious circle

 

Real GDP growth in Latin America and the Caribbean between 1951 and 2023 says a lot about the region's cyclical dynamics, but where the impact is really felt is in the average of 0.8% over the last 10 years. This is even lower than the so-called "lost decade" of the 1980s. Latin America grew strongly between 1951 and 1970 as a result of the post-war recovery.

It could be argued that, as it is today, the driving force at that time was raw materials, but also a dynamic of import substitution and industrialisation driven by strong social investment in Keynesian terms and elites willing to build large-scale infrastructures. The oil crises, even in Venezuela, were not due to a lack of resources but rather to macroeconomic criteria. They led to what would later become the crises of the 1980s, which some have called the lost decade. Since then, the cycles have been dizzying, with the most recent being the end of the commodity cycle/great crisis of 2009 and the pandemic.

This somewhat disappointing growth is largely the result of institutional weaknesses and a lack of agreement among elites to implement measures to enhance productivity and competitiveness. This creates a challenging cycle that further erodes institutions and divides elites, with a range of complex factors contributing to this dynamic. These include the rise of organized crime, the entrenchment of inequality, polarization, social conflict, and a general sense of stagnation and/or weakening of supply chain infrastructure. This, in turn, increases the risks associated with climate change, corruption, disinvestment in infrastructure, and the expansion of transnational crime. 

It is possible that the greatest impact of this vicious circle may be to weaken democracy and economic freedoms. While this may be a rather pessimistic vision, it seems likely to occur and is not exclusive to the region. There is a risk for democracies in the world today due to several different variables, both endogenous and exogenous, which are not very different from those in Latin America.

The current vicious circle of Latin American democracies, although the Eurasian powers are keen to exploit it, the Chinese will be the most successful in doing so because they have a different approach to time management and patience. However, China also faces internal challenges. While not as significant as those experienced by the West, they are nevertheless present. An escalation of internal political issues in China could potentially lead to a similar scenario as that which unfolded in India approximately 500 years ago, resulting in a shift in regional power dynamics. However, this is already a matter of global concern. Russia and Iran, on the other hand, have a more limited impact. The United States and the European Union, despite having a stronger presence in the region, are unable to avoid becoming inadvertently involved in perpetuating this vicious cycle due to internal challenges related to their values.

It is evident that Latin American democracies are facing challenges, regardless of the ideology or form of the threat. However, this does not imply that they are not capable of resilience. This is something that should be verified over time. At this juncture, the most imminent risks are evident in Argentina, Ecuador, Mexico, Colombia, Bolivia, El Salvador and Peru. Brazil is still performing well, but the success of its economy will depend on the ability of Lula to maintain stability. It would be reasonable to conclude that the Venezuelan and Nicaraguan cases are effectively lost, and that the same is true of the Cuban case. The three countries represent the epitome of tyranny in the region, serving as a case study of what can happen when a country descends into chaos. Haiti provides a stark contrast, illustrating the potential for a country to avoid such a fate.