The impact of Dictatorships on
Economic Development
According to Mayan calendar, the year 2012 will
see a period a great change for mankind. A period of peace and prosperity for
the people of Earth. For people who have travelled or lived in South America in
the last 20 years, my comments or optimism towards the region must sound at
least "strange". Without any doubts, european migration has
positively contributed to growth and productivity. But political processes have
also played their role. After WW2, the World was divided in 2: "the
West" and "the Soviet bloc". Whereas in Europe people were told
that "the West" was composed of Western Europe, the US and allies
(Canada, Australia); in Latinamerica people were told that they were actually
part of "the West" as well (I would assume as part of the Western
Hemisphere). I found out, to my surprise, that the Latin-american region is NOT
really considered part of the West, but it is considered a 3rd world region at
the same level as Africa or Asia.
The Latin-American region became under US political
and military influence after 1945 in it's "War against communism".
Puppet governments where supported politically and financially in order to
secure that the region did not turn to communism. Communistic parties, or
people that had communistic or socialists views (there was no difference
between communism and socialism), where kidnapped and murdered by local
authorities. Operation Condor[1] was
a campaign of political repression carried out by US-backed Latin American
dictatorships in the 70s and 80s that was designed to eliminate tens of
thousands of leftwing activists. It was the idea of Chilean dictator Augusto
Pinochet, who enlisted Argentina, Bolivia, Paraguay, Uruguay and Brazil in a continent-wide campaign.
In Argentina, an estimated of 30.000 people "disappeared" in the last
dictatorship the most bloody of all. Pinochet's[2]
dictatorship in Chile was the longest and lasted from 1973-1990. Thousands of
Chilean refugees moved to Scandinavia in the beginning of the 1980s. They
established themselves in communities which can be still found today. The
members of these communities can of course not believe or accept the
advancements Chile has had since the 1990s.
The same situation, but opposite, occurred in
Eastern Europe. In the same way that the Latin-American region was not really
part of "the West" but satellite contries under the influence of the
West, countries in Central and Eastern Europe were not part of the Soviet Bloc
but satellites under Soviet influence. In the case of the Soviets, dictators
were placed more directly. Everyone knew that Nicolae Ceausescu[3],
the bloodiest Rumanian dictator who ruled for 1967 to 1989 years until
executed, responded to Soviet interests. This was not so in Latin-America, were
the public only found out that it was "the West" that was behind the
dictatorships only a few years ago. In the same way that Americans wanted the
Latin American region to turn extreme right, the Soviets wanted the Central and
Eastern European region to turn extreme left.
The threat of WW3 hovered for many decades in what
was known as the Cold War[4]. The Cold
War was a state of political and military
tension after World War II between powers in the Western Bloc (the United States, its NATO allies and others) and powers in the Eastern Bloc (the Soviet Union and its satellite
states). It's climax was the Vietnam War[5],
were US and Soviet fought for control of Vietnam, in an effort to spread their
influence in South East Asia. Secuels in landscape and the region still exist
today, an example being the Agent Orange[6],
which was spread as a herbicide from airplanes and has produced deformities not
only to those exposed but also to their children and grandchildren.
The attempt to control the regions did not only
obey political interests but also economic. The puppet governments in Latin
America where also turned "Adam Smith" from an economical
perspective. In Argentina, the process of de-industrialization carried out from
1976 - 2001 meant opening barriers to trade and destroying the local industry.
Whereas the US spoke about liberalism (which was really New Liberalism, carried
out from 1980 - 2008), the country was in a better position to compete with
imported goods. It was not so for Latin American countries. Opening barriers of
trade meant importing cheap goods and destroying the jobs in the local economies.
The region was under political influence from the US until the 1980s, but maintained
economic or thought influence until the 1990s. This explains why TODAY the
region is still divided in left (socialist) and right (republican) from a
political perspective. Older generations actually lived the period where being
a leftist was a crime to be paid with your life.
From the end of the 1990s and with the rise of
Chavez as president in Venezuela, the left was slowly reestablished in Latin America.
With Chavez and Evo Morales as the most leftists, other political figures such
as Lula Da Silva, Rafael Correa and the Kirchners in Argentina focused on
government policy to reestablished workers rights which had virtually disappeared
in ultra rightist governments. These governments have been protectionists of
national interests, and as such have received mass critique from international
media. Chavez was portrayed as a Dictator, when he was democratically elected.
With defamation campaigns and bad press, international leaders tried to weaken
his position. Under his command, Venezuela was very bad for business but he did
protect the national oil reserves from foreign appropriation and improved
significantly the lives of poor people. Government such as his as known as
"populist governments", where social plans, welfare, etc, are handed
out to the poor people in exchange of a vote. But definitely not dictatorships.
With a series of populist governments, South American countries might not have
developed but "caught up" in many social aspects where they were
lacking. However, as I always explain, after many years of populism growth
stagnates. This has happened to Argentina from 2011 - 2015.
The rise of democracy in Latin America, and new
young generations who are not as politically "charged" as their
progenitors is bringing stability to growth and institutions. This explains why
they have not yet matched central countries, but they have rapidly taken
distance from Third World countries in other regions. Besides the atrocities
and crimes against humanity that dictatorships bring about, they hinder growth
and are bad for business. The impact of democracy in development cannot be
stressed enough. While Europeans think that things haven't changed, the Latin
American region has advanced substantially in a period of only 20 years. From
asking for advice to developed nations, to finding their own solutions to
problems. From commodity based economies, to the debate of value added that is
only starting to happen now. From bad working conditions, to solid laws for
workers. The same could be said about Central and Eastern Europe. After a civil
war, the ex-Yugoslavia is showing signs of recovery. For polish people, working
in the West might not be as attractive unless they are offered good working
conditions. In the article "I want you back"[7],
you can see how some Eastern European countries want to get back their most
talented citizens by offering them better working conditions. It might work out
for some, depending on their current situation. Brexit will of course have a
stronger impact on foreigns and their children than on British people.
After the fall of the Iron Curtain and having
moved towards democracy and economic freedom, the Latin American and Eastern
European regions (who have a common history having been suppressed by military
governments under the Cold War), will find that they are in a strong position
to make the most of Revolution 4.0. Once solid healthcare and educational
systems are in place, it will be up to the citizens to see how they can capitalize
on these fantastic period of changes. The same cannot be said about countries
that have still not found a way to freedom, or that are trying to get rid of
totalitarian regimes. Achieving solid institutions and economic freedom comes
of course before all else. To those who have not understood my point, that is
what differentiates South America FROM
Africa!
Cristian Bøhnsdalen
CMO/CFO and Co-Founder @ITRevolusjonen
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