key term - Economic Dependency in South America

Definition

Economic dependency in South America refers to the reliance of the region's economies on foreign markets and investments, often resulting from historical colonization and the unequal exchange of resources. This concept is particularly relevant in understanding how South American nations became tied to European powers during the Age of Exploration, as they exported raw materials and commodities while importing manufactured goods. The legacy of this dependency has had long-lasting effects on the economic structures and development trajectories of South American countries.

5 Must Know Facts For Your Next Test

1. During the Age of Exploration, South America primarily exported precious metals, agricultural products, and other raw materials to European countries, leading to economic dependency.
2. The mercantilist policies of colonial powers encouraged South American nations to focus on resource extraction rather than developing their own industries, reinforcing dependency.
3. Many South American economies today still struggle with economic dependency due to historical ties established during colonial rule, which favored foreign investments over local development.
4. The concentration on exporting a few commodities left South American economies vulnerable to fluctuations in global market prices, exacerbating economic instability.
5. Post-colonial efforts to diversify economies have faced challenges due to entrenched patterns of dependency that prioritize exports over local production and consumption.

Review Questions

• How did colonial practices contribute to economic dependency in South America during the Age of Exploration?
  • Colonial practices established a system where South American countries were primarily used as sources of raw materials for European powers. The extraction of resources like gold, silver, and agricultural products led to economies that were heavily reliant on these exports. Consequently, this created a cycle of dependency that limited local industrial growth and kept these nations economically tied to their colonizers.
• Discuss the role of mercantilism in shaping the economic structures of South American countries during the Age of Exploration.
  • Mercantilism played a critical role in shaping South America's economic landscape by enforcing trade policies that favored the mother countries over the colonies. This resulted in a focus on exporting raw materials while importing manufactured goods from Europe. Such trade practices hindered the development of local industries in South America and perpetuated a system where economies were dependent on external markets for manufactured products.
• Evaluate the long-term impacts of economic dependency established during the Age of Exploration on contemporary South American economies.
  • The long-term impacts of economic dependency from the Age of Exploration continue to shape contemporary South American economies by perpetuating reliance on commodity exports and foreign investments. Many countries face challenges such as vulnerability to global market changes and limited industrial diversification. This legacy complicates efforts for economic self-sufficiency and equitable development as nations strive to break free from historical patterns while addressing modern economic challenges.

Related terms

Colonialism:

The practice of acquiring full or partial control over another country, occupying it with settlers, and exploiting its resources.

Mercantilism:

An economic theory that emphasizes the role of the state in managing international trade to increase national wealth, often through strict regulations and tariffs.

Export Economy: An economy that relies heavily on the export of primary products or raw materials rather than developing a diverse industrial base.