The
countries of Latin America remain highly susceptible to international political and economic trends. Since 2002, the region has prospered: growth has been close to 6 percent per year—the highest since the 1970s, and far above the lackluster, long-run average of 3 percent. This growth spurt is traced in large part to a bonanza: high international prices for commodities. But credit must also be given to governors who have pursued sober macroeconomic policies. To date the region has navigated the shoals of the concomitant weakening of its most important trading partner—the United States—and the mess in the international credit market. Still, the boom from robust commodities prices, in everything from oil to copper to soybeans, raises unsettling questions.
A healthy average growth rate masks weaknesses. Not all countries in the region have a valued commodity. Moreover, within each country there are sectors that are stagnant—or worse. In particular, the region’s incipient ind...
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