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 nearly two centuries of freedom from colonial rule, not one republic has achieved the status of a developed country. Furthermore, the gap between living standards in Latin America and those in the developed countries has steadily widened since the early nineteenth century, when – by some accounts – the subcontinent was the most prosperous of the developing-country regions.

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 has remained a peripheral region in which external influence has been 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.

Peripheral status has often been used to explain Latin American backwardness. Other countries faced the same constraints, however, and still managed to transform their position while abiding by the rules of the game.