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Economy

Latin America Must Break The Commodity Curse

The death of Hugo Chavez, who propped up Venezuela with oil profits, is another reminder that Latin America needs to look for economic development beyond natural resources.

Aluminium mining in Brazil
Aluminium mining in Brazil

SANTIAGO - There are a lot of Latin American countries complaining about their overvalued currency, which strips them of competitively in the export market and allows their markets to be invaded by cheap imports.

One of the problems is Latin America’s built-in treasure. The region is rich in natural resources, and the current economic boom in Latin America is largely thanks to the high prices for many of the commodities that Latin America exports.

At the moment, over 90 percent of Latin Americans live in countries that are commodity exporters. That number includes Mexico, which has managed to diversify its economy but continues to rely on petroleum exports for a large portion of government revenues.

The truth is that the economic history for many countries in Latin America is closely connected to the rise and fall of commodity prices. In Ecuador, for example, there is the cacao era, the banana era and the oil era. In Chile, miners at the beginning of the 20th century rode the riches of the saltpeter (a key ingredient in fertilizers) boom, but the prices crashed in the 1920s as it was replaced by synthetic ingredients. That brought poverty and political instability to the whole country until world demand for copper brought back relative prosperity.

Latin America’s dependance on commodity exports also explains why the region suffered so little during the 2008-2009 global financial crisis. When the rich countries entered an economic recession, Latin America was able to keep growing thanks to the demand for raw materials from China.

The rise of China and other developing countries over the past decade, together with the stable demand from developed countries, has kept commodity prices shooting upward, flooding our countries with dollars. This abundance has helped the dollar become even cheaper, making imports easier. But this, of course, has made it harder to export products that are not raw materials.

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Ideas

García Márquez And Truth: How Journalism Fed The Novelist's Fantasy

In his early journalistic writings, the Colombian novelist Gabriel García Márquez showed he had an eye for factual details, in which he found the absurdity and 'magic' that would in time be the stuff and style of his fiction.

Colombian novelist Gabriel Garcia Marquez reads his book

J. D. Torres Duarte

BOGOTÁ — In short stories written in the 1940s and early 50s and later compiled in Eyes of a Blue Dog, the late Gabriel García Márquez, Colombia's Nobel Prize-winning novelist, shows he is as yet a young writer, with a style and subjects that can be atypical.

Stylistically, García Márquez came into his own in the celebrated One Hundred Years of Solitude. Until then both his style and substance took an erratic course: touching the brevity of film scripts in Nobody Writes to the Colonel, technical experimentation in Leaf Storm, the anecdotal short novel in In Evil Hour or exploring politics in Big Mama's Funeral. Throughout, the skills he displayed were rather of a precocious juggler.

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