The economic development of Latin America since independence is a story of unfulfilled promise. Despite the abundance of natural resources and a favorable ratio of land to labor, and after two centuries of freedom from colonial rule, not one republic has yet achieved the status of a developed country. Furthermore, the gap between living standards in Latin America and the United States – often taken as the most relevant country for comparison – has widened since the early nineteenth century. Although individual countries in various periods have grown rapidly, none has been able to sustain a high rate of growth of GDP per head for long enough to eliminate the gap with the developed countries.

Even though the collapse of Iberian rule ended restrictions on commerce, Latin America continued to operate in a world in which rules were made by others. Unable to break into the charmed circle of advanced capitalist countries, Latin America remained a peripheral region in which external influence was preeminent. Trade cycles, investment and consumption patterns, the accumulation of debt, and the transfer of technology have all been driven by forces over which Latin America has exercised little control. Even during the period of inward-looking development, the ability of external events to shape internal dynamics was powerful.