How will they respond? Presidents Lula of Brazil, Fernández
de Kirchner of Argentina and Morales of Bolivia will all
find difficult economic choices in the months ahead.
Within two years of the Wall Street crash of
1929 there were military coups in seven Latin American countries, including Brazil and Argentina. The
Great Depression that followed hit the region hard:
ten countries saw the value of their exports fall by
more than half between 1928 and 1932. (Chile’s total
trade fell by no less than 83 percent.) But the politi-
Michael Reid is Americas Editor of The Economist.
The paperback edition of his book Forgotten
Continent: The Battle for Latin America’s Soul ( Yale
University Press) was published in March 2009.
cal consequences were even more profound and lasting. In the decades between 1870 and 1930—the first
great period of globalization—a liberal order that
combined export-led growth with civilian representative government, albeit of an oligarchic character,
was gradually established in much of Latin America.
The Depression swept this away. In its place came
inward-looking, more statist economic policies and
political volatility, with dictatorship punctuated by
brief democratic interludes.
Will the new depression, as some economists are
already calling it, have a similarly destabilizing effect
on Latin American politics?