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Economics encompasses the study of the allocation of scarce resources, whose underpinnings accords a comprehensible understanding of the political game applied by a certain region (Vanden and Gary 151).
In this case, a susceptible understanding of the economics and politics of Latin America accords with a patent understanding of the allocation of scarce resources and ways in which this allocation is affected by political power and values.
Thus the dependentistas argued that underdevelopment in Latin America resulted from the region being brought into the capitalist system to satisfy the economic needs of metropolitan powers (Vanden and Gary 162).
The above quote ascertains the fact that underdevelopment in Latin America can be attributed to the capitalistic control asserted on the region by the metropolitan powers of USA and Europe. This control was asserted with the aim of enhancing the economic gains of the metropolitan powers.
The advanced economic development of Latin America can only be attributed to requirements set by metropolitan powers originating from Europe. This is because all such economic decision as the place and time of establishing infrastructure, mines and plantations in Latin America, were dependent on the economic and wealth requirements of the European and United States metropolitan powers.
This culminated into the development of the dependency theory, under which the Latin American countries became dependent on the production and exportation of the various primary products to the United States and Europe. A good example of the primary products by country encompass coffee in Colombia, petroleum in Mexico, copper in Chile, Tin in Bolivia and bananas in Honduras.
The Metropolitan powers advocated for massive production and exportation of primary products at a low production costs in Latin America, such that the Latin American countries had to import finished products at a higher price.
In this case, the Metropolitan powers managed to take advantage of the cheap labor and available resources in Latin America to amass considerable wealth, while the Latin Americans were gaining little wealth from the same.
Further underdevelopment of the Latin American countries was stimulated by economic transition, under which the prices of the original products were set by market forces as opposed to a centralized system. This is because the metropolitan powers had advocated for comparative advantage that culminated to the production of the same primary product by various countries.
A good example of this is the production of petroleum in Mexico and Venezuela and the production of coffee in El Salvador and Colombia. This called for the development of such centralized organizations as The Organization of Petroleum Exporting Countries and the International Coffee Organization, aimed at controlling the prices of coffee and petroleum.
The success of such organization was limited as long as the metropolitan powers continued to exercises neocolonialism, through the help of the political and economic elite class in the Latin American countries, even after the end of colonialism.
The fact that the political elite of the various Latin American countries worked for the foreign corporations set up by the metropolitan powers, enhanced the dependence of the Latin American political autonomy on the metropolitan powers.
This culminated into further underdevelopment of the Latin American Countries as most of the foreign corporations became monopolies due to substantial Latin American governmental protection. This eliminated any form of free trade leading to further underdevelopment of the Latin American Countries, as they exported at a low price and imported at a very high price.
This however changed with the advancement of economic thought by the Latin American economists under ECLA. This organization advocated for import substitution industrialization, under which such countries as Mexico would utilize the foreign exchange it acquired from the exportation of petroleum to establish industries that could produce most of the products it initially imported.
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This would culminate to the accumulation of more capital in the local economy. Import substitution industrialization led to the setting up of such major production industries as Volkswagen, Toyota and Chrysler in Mexico and Brazil, culminating into economic development, neo-liberalization and democratization in the Latin American.
Under economic development, the financial health of the Latin American countries was improved by the emergence of the dual economy that relied on agriculture and industries sectors, a factor that had lacked under metropolitan powers’ colonialism and neocolonialism.
Democratization saw the power transition from an authoritarian political system to a democratic political system in which, the local Latin Americans had a say in the political running of their countries.
The original-neo-liberalization that was controlled by the metropolitan powers was replaced by a neo-liberalization based on import substitution industrialization. In conclusion, the underdevelopment of the Latin American countries was as a result of their economic and political control by the metropolitan powers.
Vanden, Harry E, and Gary Prevost. Politics of Latin America: The Power Game. New York: Oxford University Press, 2012. Print.