From the early 1980's, South America experienced a severe debt crisis, which
diminished the countries' ability to pursue independent economic policies. The
rise in oil prices from 1972 and easy access to loans caused the Latin American
countries' foreign debt to quadruple during this decade. Thereafter, the loan
sources dwindled; When raising new loans, the lending banks, via the World Bank
and the IMF, demanded a restructuring of the economy.
The goal was macroeconomic stability and strong economic growth. The funds
were removal of public subsidies, liberalization of capital markets, easier
access to foreign investment, privatization and public savings. The wave of
privatization has hit almost everywhere, and the problems of inflation and
foreign debt are generally under control.
Countryaah: Introduces South America as a continent, includes a full
list of countries in South America, and provides location map of South America.
But the side effects from the process have been stressful, and in Argentina
and Brazil, the lack of initiatives that could offset the growing social
disparities has been striking.
Brazil is in every way the great power of the continent and has the world's
eighth largest economy. Argentina and Colombia follow with rankings among the
top 30. Measured by degree of economic development, most of the countries belong
to the so-called middle-income countries with Argentina, Brazil and Chile (the
ABC states) together with Uruguay in the upper part. Then comes Venezuela,
Colombia, Peru and Paraguay, while Ecuador and Bolivia are the poorest. Most
often, Argentina and Brazil are considered the so-called NIC countries with a
significant industrial development.
Until the mid-1900's, South America consisted predominantly of agricultural
societies, but as in the rest of the world, industry, trade, and the service
industry have grown in importance.
Agriculture. Only 6% of the area can be cultivated, but in relation to the
relatively small population, there is ample land available. However, the
development of South American agriculture has been hampered by a very skewed
land distribution, which is a legacy of colonial times.
Large parts of the best land are still owned by large estates with extensive
cultivation methods. On the other hand, most farmers are employed on small farms
with cultivation for their own consumption. A number of large farms are operated
as plantations, whose crops have changed over time depending on economic
conditions and prices in the export markets.
Effective modern large-scale agriculture, often with irrigation, is now found
in southern and eastern Brazil, in parts of Argentina and off the coast of Peru.
This is where South America's significant exports of products such as soy,
sugar, bananas and coffee come from. Agricultural production has increased a lot
since 1975, and meat production has doubled or tripled in most countries. Cattle
and sheep play a major role everywhere, and in the poorest areas also goats;
especially the latter give rise to a strong wear on the vegetation.
Land reform is a recurring theme in every election campaign in South America,
but in relation to the scale of the problem, very little has happened in most
countries. A well-known initiative to acquire land is the construction of
Transamazonica, a highway system through the Amazon that opened up the
rainforest area and enabled the colonization of hitherto inaccessible areas.
Forestry. The Amazon is the world's largest rainforest area. The forest
resources are of local importance to the rainforest Indians and the settlers who
have been allocated plots of land after the construction of roads in the areas.
Extraction of precious wood, for export, takes place on a commercial basis.
Brazil is one of the world's largest producers of wood, pulp and paper, but much
of the raw material comes from eucalyptus plantations outside the Amazon.
The fishery was greatly expanded and modernized after World War II. Some of
the world's richest fisheries are off the west coast, and in 1994 Peru and Chile
accounted for 21% of the world's fish catches. By far most of it is industrial
fishing for fishmeal. Incidentally, fishing is of particular local importance;
this also applies to freshwater fishing.
Mining. South America is very rich in minerals, and many ore fields were
known even before colonization. In addition to gold and silver, there is copper,
iron, tin, lead, coal and oil. Carajás in Brazil is the world's largest iron ore
mine, and in terms of tin and especially copper, a significant part of world
production comes from South America, especially Chile and Peru. South America
contains approximately 8% of the world's known oil reserves; Venezuela is by far
the largest producer.
Industry. Manufacturing employs 15-25% of the workforce in the various
countries, and most have experienced the tendency, also known from the actual
developing countries, that industrial employment is declining in favor of the
service industries. Several countries' development strategies have aimed to
increase the production of their own industrial goods, and Brazil, for example,
reached a degree of self-sufficiency of 95% in the 1990's.
A large part of the industry is located in the capitals and the largest
cities, and often the development has begun with the processing of own
agricultural products. Other companies have emerged on foreign initiative, e.g.
automotive industry in Argentina, Brazil and Venezuela. In order to promote
foreign investment, free zones have been established and special rules have been
adopted for foreign investors.
Transport. Along the Pacific Ocean runs the Pan-American Highway, which at
Santiago sends a side road across the Andes to Buenos Aires. The Transamazonica
Highway System is still under construction (2005).
Environmental problems. The arrival of whites in South America led to major
encroachments on nature. Forest areas were constantly being felled and this
development continues. At the coasts, the forests were replaced by plantations,
and today the rainforest is reduced in favor of roads, urban facilities,
agriculture, cattle breeding, mines and oil extraction.
For the extraction of gold, large amounts of mercury are used, which pollute
the rivers. Oil extraction also creates major problems; Among other things, is
Maracaibo lake biological death, and Indians in Ecuador and Peru have been
destroyed their land by spills from oil pipelines.