Population and Economic Development in Latin America

Abstract

Latin America has been sparsely populated since colonial times. The importation of slaves during the first half of the 19th century and European immigration during the second half have provided the manpower needed for the expansion of the Latin American colonial economies. At the end of the last century, industrialization in the form of import substitution began where sufficiently large domestic markets, brought about through increasing exports, permitted it. Consumer goods industries were created near population centers of sufficient size to provide a sizeable domestic market.

After 1930, development became the driving force of economic growth in several Latin American countries. The extent to which import substitution could be accomplished depended on the size of the domestic market in each country. This is the reason that industrialization has made more headway in the three largest countries of the area. The small population size of many Latin American countries is now a constraint to their development. The enlargement of their domestic markets through the formation of free trade areas may spur development, but this cannot be achieved in the near future. For them, population growth is still important. Fertility is, however, already decreasing in Latin America and population growth is likely to diminish in the near future. In order to develop, most Latin American countries will have to integrate a larger proportion of their population into the markets, since they will not be able to continue to rely on population growth for the expansion of effective demand.