Latin America Essay

The economic and social gap between Latin America and North America is certainly a mixture of path-dependence causes, and current economic behaviors. This is mainly because, on one hand history legacies, are essential to understand the current patter of unequal or unstable growth. On the other, economic prosperity is also about the degree to which each region has been capable of changing over time and adapting to external factors in order to create continued growth.

Mahoney, aims to explain the consequences of colonialism in the present development of the once colonized territories. He argues about the importance of “institutions” in both, the precolonial territories and the colonizer territories, which creates a high dependency on the post-colonial’s
The inclusive/Liberal institutions had the purpose of stimulating comparative international advantages, as well as invest in entrepreneurial incentives to the citizens resulting in technological innovations. The extractive/Mercantilist institutions, on the other hand, were “centrally concern with maximizing wealth generation in the short run” (2010: 21) as Mahoney explains, only for benefits to the ruling elites, providing no incentive to the citizens to participate in any economic activity or encourage technological innovations. Furthermore, Mahoney presents another variable that may affect development today and it is the “level of colonialism” in which the colonies – with not regards of its type of institutions – are immerged in the colonized territories. There are two different outcomes that are based on both, the type of colonial institutions and the level of colonialism: Higher or lower level of development.

He comes up with a matrix which summarize the four different outcomes:
The combination of high level of colonialism with a Mercantilist colonizer will result in lower level of development in the colony’s