The Decline of Latin American Economies: Growth, Institutions, and Crisis

Published by EH.NET (January 2008)

Sebastian Edwards, Gerardo Esquivel and Graciela M?rquez, editors, The Decline of Latin American Economies: Growth, Institutions, and Crisis. Chicago: University of Chicago Press, 2007. viii + 418 pp. $85 (cloth), ISBN: 978-0-226-18500-1.

Reviewed for EH.NET by Richard J. Salvucci, Departments of Economics and History, Trinity University

This book is something of a disappointment, but certainly for no intellectual reason. The papers in it, the results of an NBER conference, are almost uniformly excellent. Their authors are a distinguished group. Chances are if you’re interested in Latin America, you will learn something new, come away stimulated, and wish you could read the conference commentaries, which do not appear. So what’s not to like, aside from proofreading that does the University of Chicago Press no credit?[1]

Well, there is the title, The Decline of Latin American Economies. It is a clich? that you can’t judge a book by its cover. You can’t judge this one from its title, either. True, the lead paper, by Leandro Prados de la Escosura, “When Did Latin America Fall Behind?” is probably destined to become a classic reference. Not only can I do his effort no justice in a brief review: Prados’ paper probably merits a conference (or at least a critical response) of its own. Subtleties aside, the paper sensibly asks “decline relative to what?” and then sets out to frame a proper answer drawing on something other than the usual suspect sources. You may not agree with Prados’ quasi-postmodern “it all depends” conclusion, but then we are reminded that, in the final analysis, index numbers are, perish the thought, constructions. Yet after this really promising start, the volume simply falls apart. It is about everything. To be sure, it is an absorbing, sophisticated, even pioneering everything. But the only thing that “declines” is coherence. I guess you really can’t publish a volume entitled “We had a conference, invited a bunch of really smart people to do their thing, and this is the result.” But honestly, that’s what you get.

And, boy, you do get some great stuff. As usual, what you rate “best” is mostly a matter of preference, but there are some real gems included. The briefest and most badly edited paper in the volume, by Gerardo (aka “Geraldo” in its references) della Paolera and Mart?n Grandes, “The True Measure of Country Risk … (its baroque title is almost as long as the text that follows) may be the single most perceptive piece written about nineteenth-century public finance in some time. Looking at sovereign and subsovereign (provincial) bond spreads in Argentina from 1886 through 1892, they conclude “the economic effects of the political structures of emerging nations are an important consideration in analyzing their economic development … [and] should be priced accordingly” (p. 210). Their insight cuts through all the noise about liberals, conservatives, centralists, federalists, revolts, rebellions and “revolutions” ? the political chatter that contaminates the few decent time series we have (for any country in the region) and provides both a coherent framework for analysis as well as an indication of how mid to late-century Namierist politics might actually affect macroeconomic outcomes. My colleagues in history, to the extent they think about economic history at all, rather confusingly contend that economic models either prove the obvious or the impossible. Too bad they probably won’t read della Paolera and Grandes.

As usual, things Mexican are overrepresented, as if Mexico and the purely notional “Latin America” were coterminous. That’s OK with me (again, personal preference), since the papers by Aurora G?mez-Galvarriato, by Gerardo Esquivel and Graciela M?rquez jointly, by Noel Maurer and Stephen Haber jointly, and by Pedro Lains (more for his rehabilitation of Donald Keesing’s neglected work than for the empirics) are essentially what you’d expect from scholars of this caliber. G?mez-Galvarriato’s superb research on the textile industry not only endogenizes protection in Mexico, it endogenizes the “perfect dictatorship” of the PRI as well and puts to rest once and for all the simplistic, economically chauvinist and wildly ahistorical notion that the commercial policies followed in Mexico before the 1980s were just a “mistake.” Shortsighted they may have been, and increasingly out of sync with structural changes in the world economy already evident by the early 1970s as well. But by then, Mexico’s politics were a matter of institutional inertia too. Yes history matters. It took until 2000 to get the PRI out of Los Pinos, but then it had been in power since 1929. Such changes are hardly costless.

I would be remiss if I did not mention that there are also very thoughtful papers by Luis Catao, by Sebastian Edwards, by Michael Bordo and Christopher Meissner jointly, and by the late Kenneth Sokoloff and Eric Zolt jointly. They deal expertly with international capital flows; establishing the credibility of stabilization programs; variations, mostly venial, on ‘original sin’; and the way in which stark inequalities in wealth and power have contrived to reproduce themselves in Latin America since the nineteenth century. Of most interest to historians would probably be the paper by Sokoloff and Zolt. I can only hope that one of Sokoloff’s coauthors, colleagues, or students will bring what had already become a very influential research program to the conclusion presumably envisioned.

I offer no ritualized concluding paragraph. A book which is not a book, however outstanding, really does not deserve one. You say something’s missing, right? Join the club. That’s the best way to convey the experience of reading this frustratingly directionless “publication.”

Note: 1. For one example, see the footnote on p. 197, with the priceless Portuguese title, “Brazil: 1824-1957: Born on Mau Pagador.” That sounds more like a line from “The Ballad of Davy Crockett” than the title of Marcello (sic) de Paiva Abreu’s article. And this is the sloppiness you can see.

Richard Salvucci is author of the forthcoming book, La Deuda Eterna: Politics and Markets in Mexico’s “London Debt,” 1823-1887.