Latin America Research Paper

Latin America and its Varying Development

Latin American has an abundance of the resources necessary to make any country rich. No continent in the world compares with Latin America in the amount of cultivable high-yield soil, metals important to industrial development: copper, tin, iron, silver, gold, zinc, many others, their timber reserve, as well as oil and hydroelectric power, all of these are found in abundance in Latin America. Yet why is it that Latin American countries are so rich in natural resources but at the same time their people are poor.

Latin America as a region has had substantial success in reducing extreme poverty over the last decade, its still-high levels of income and wealth inequality have remained roughly the same.

According to this, Latin America should a well-developed region after the third wave of democracy, its population should be prospering with all of the benefits that come from democracies, such as high levels of education, health, quality of life, and life expectancy. But that is not the case. Does democracy help countries develop? It can be argued that democracy does not appear to "cause" growth, more so it creates a demand for democratic participation (Shin 1994). Democracy is neither a "quick fix" for development problems, nor a substitute for

Multinational corporations, for example, are actors that need to be accounted for, because their role usually involves providing FDI. FDI projects can be either horizontal or vertical. Horizontal FDI is when the whole production process is copy-pasted between economies, the production facilities are set up with the aim of servicing that specific economy. Horizontal FDI is often used instead of exports to get past trade barriers such as import tariffs (Helpman, Melitz & Yeaple 2003). Vertical FDI on the other hand is where the production process is broken down in stages between economies. Each economy takes care of only a part of the whole production process of the relevant good and the outputs are then transported to their final assembling place. Vertical FDI can be used to gain from international differences in price of inputs, such as labor (Helpman