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Historical Causes of Underdevelopment in Latin America


The history of colonisation often focuses on its effect on European countries and the patterns of trade that emerged on the global stage. In turn, the influence of the process on the colonised regions and their future development is often overlooked. In their chapters, Stein and Stein and Burns explore the history of colonisation of Latin America and its impact on the region’s future economic development. Stein and Stein focus more on the mechanisms that triggered the export of silver from South America and the ways that they have helped Spain. Burns, on the other hand, explores the devastating effects of European colonisation and export on various regions of Latin America. Combining the information from the two articles allows discussing and analysing the historical causes of underdevelopment in Latin America.

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Silver Export in 1517-1700

First of all, it is essential to note that the primary cause of the fast-paced colonisation of Latin America was rooted in Spain’s military activity in Europe. As noted by Stein and Stein, Charles V had a vision of creating a universal Catholic Empire centred in Europe (52). However, this vision contradicted the notions of political and religious autonomy that were gradually spreading over Europe. In France, the ideas of sovereignty prevailed during the rule of the Valois, whereas in England, the notions of independence were spread by Tudors (Stein and Stein 52). The contradiction between Charles V’s vision and the general trends in Europe meant that achieving the goal required substantial military efforts.

One of the critical problems for the Castilian state was finding the financial resources needed to afford such an endeavour. At the time, the preferred source of funding was borrowing, but the Castilian economy was not perceived to be strong enough, making the state’s borrowing capacity limited (Stein and Stein 53). Finding a reliable source of revenue that could support the economy was vital for military operations to continue. The import and trade of goods from other parts of the world could provide the state with a stable source of income, thus relieving the issue with debt liquidation and increasing the Treasury’s borrowing capacity.

Precious metals have always been an essential source of revenue for a broad range of states, mainly because of their relatively stable prices. Nevertheless, in order to redeem the situation in the long-term, the flow of precious metals must have been abundant and steady. Upon the exploration of Mexico and Peru, the Spanish colonisers found rich deposits of silver, which could satisfy the state’s needs for income. According to Stein and Stein, this solved the state’s financial problems in two separate ways (53). First of all, the large-scale export of silver from Latin America could be used to fund Charles’s military operations and reduce the need for additional funding (Stein and Stein 53). Secondly, the success in acquiring and trading precious metals advertised the financial capacity of Castile’s treasury, gaining the trust of creditors and allowing the state to borrow money whenever additional funding was required (Stein and Stein 53). As a result, imported silver from the colonised lands solved the state’s funding issue and became an essential source of revenue between for almost two centuries.

Based on the information provided in the chapter, there were two effects of this process that contributed to the underdevelopment of the colonised areas. First and foremost, the Spanish colonisers took from Mexico and Peru a significant share of their precious metal resources, which means that these regions could no longer utilise them for economic development. If Mexico and Peru had access to all the silver that has been exported by Spanish colonisers over this period, they could have used it to aid in the economic development of the region. Secondly, the success of Castile in retrieving and trading silver from Mexico and Peru attracted more attention to the South American area. This led to the increased interest in colonising Latin American lands, which resulted in further disruptions to the local economy.

Colonisation during the 19th Century

While the first reading focuses on the periods between 16 and early 18 century, Burns examines the effects of colonisation on Latin America in the 19th century (134). This allows mapping additional long-term effects of colonialism on the development of the region. There are three critical trends examined in the chapter: export, modernisation, and land ownership. All of these trends had a significant impact on the countries of Latin America.

The creation of an export economy is, possibly, the essential trend contributing to underdevelopment. According to Burns, European-oriented export economy disrupted the agrarian economy that was producing food for local consumption (134). As a result of these changes, human and land resources were used for the benefit of European economies rather than for supporting regional development. This had a devastating effect on the quality of life of people in Latin America, leading to poverty, unemployment, and inequality. Moreover, it created an economic dependency, which prevented the independent economic development of countries in Latin America.

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Modernisation also had a negative influence on development in the region. This might seem a contradictory statement because modernisation is often perceived as a mark of progress. Nevertheless, in this case, modernisation was focused on changing the local cultural, geographical, social, and political landscape to benefit European landowners (Burns 143). Development, in turn, is defined as the process of utilising the nation’s potential for the benefit of its inhabitants (Burns 143). Because modernisation disrupted the lives of local people instead of improving them, it inhibited the development of most regions in Latin America.

Lastly, changes to the structure of land ownership also contributed to the adverse effects of modernisation and export. Before colonisation, lands belonged to peasants, which enabled them to use land efficiently and deliver food and other resources to local communities (Burns 134). By the mid-19th century, the structure of land ownership changed, and peasants were pushed off their land. European owners could not use the land as efficiently as peasants because the latter adapted their means to environmental conditions (Burns 135). Hence, the increase in European land ownership destroyed traditional agriculture, resulting in the desolation of lands that were previously feeding local communities. The scarcity of resources brought by European land ownership had a tremendous effect on the local economy, reducing its autonomy and making it vulnerable to international market trends. It also enhanced the reliance on import because local resources could no longer feed the growing population.


All in all, both texts suggest that the primary reason for the underdevelopment of Latin America was its colonisation by Europeans. The first chapter shows that the export of silver from Peru and Mexico was useful for Spain but drained the countries’ resources that could have been used for economic development. The second chapter examines the aftermath of colonisation in greater detail, showing how the export economy, modernisation, and changed land ownership structure brought poverty and economic dependence. In these circumstances, it was impossible for the countries of Latin America to develop at a steady pace, and many of them remain underdeveloped today.

Works Cited

Burns, Bradford E. The Poverty of Progress: Latin America in the Nineteen Century. University of California Press, 1983.

Stein, Barbara Hadley, and Stanley J. Stein. “Financing Empire: The European Diaspora of Silver by War.” Colonial Legacies: The Problem of Persistence in Latin American History, edited by Jeremy Adelman, Routledge, 1999, pp. 51-68.

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