South America Economy

South American Economy

The South America consists of twelve countries, Brazil being the largest in the territory, most populous, industrialized and the strongest economy. These countries had a late industrialization, being at a disadvantage compared to the world economy, until today. In the middle of the 20th century, South American countries began a modest industrialization, based on the import substitution model. The end of the 20th century marks the opening of markets, causing a serious crisis in the industry and a change in the productive arrangement of countries, forcing greater productive specialization, concentrated mainly in the primary sector.

The primary sector, extraction and agriculture, is the sector that most contributes to the economy of South America. Agriculture is practiced in two models, subsistence and monoculture. Subsistence agriculture is practiced on small properties, with family labor, planting different cultures and with the objective of feeding the individual and the family. This model is responsible for supplying the domestic market. Monoculture is practiced on large properties, with contracted labor, planting a single crop, intense mechanization (where the terrain allows) and targeting the foreign market. According to Countryaah.com, the 12 countries in South America are Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay and Venezuela. The main products are coffee, in Colombia and Brazil, wheat, in Argentina, soy, in Brazil and Argentina, cocoa, in Brazil, Venezuela and Ecuador, sugar cane, in Peru and Brazil (which also produces ethanol), banana, in Ecuador and Brazil and cotton, in Peru and Brazil, in addition to other fruits like pear, grape and apple, in Argentina, and orange, in Brazil. Livestock farming is practiced for both the domestic and foreign markets and is of great importance for exports from countries such as Argentina, Uruguay and Brazil. The main herds are cattle, pigs, sheep and horses. Taking advantage of the large fields in the territories of these countries, livestock is practiced extensively, despite the use of cutting-edge technology. Mineral extraction is the flagship of many South American economies, mainly targeting the foreign market. Venezuela has the seventh largest oil reserve in the world, which also occurs in the Brazilian Sea and the Pacific Ocean. South America has large deposits of iron in Brazil and Venezuela, copper in Chile and tin in Bolivian territory, which has most of the ores in the southern hemisphere. Other important ores such as niobium, bauxite, silver, vanadium, are also found in South American territory. See abbreviations and countries in South America on Abbreviationfinder.

Country Inflation (percent) Currency External debt (USD million) Central government debt’s share of GDP (percent) Assistance per person (US dollars) Service sector’s share of GDP (percent)
Argentina 53.5 (2019) Argentine peso 86.1 (2018) (2017) 55.6 (2018)
Bolivia 1.8 (2019) boliviano 12,990 (2017) 53.9 (2018) 86 (2017) 49.1 (2018)
Brazil 3.7 (2019) real 542 980 (2017) 87.9 (2018) 1 (2017) 62.6 (2018)
Chile 2.6 (2019) peso 25.6 (2018) 4 (2017) 57.9 (2018)
Colombia 3.5 (2019) peso 124 364 (2017) 52.2 (2018) 17 (2017) 57.8 (2018)
Ecuador 0.3 (2019) US dollars 39 536 (2017) 45.8 (2018) 12 (2017) 51.6 (2018)
Guyana 2.1 (2019) Guyanese dollar 1,589 (2017) 52.9 (2018) 66 (2017) 42.0 (2017)
Paraguay 2.8 (2019) guarani 16 063 (2017) 21.5 (2018) 21 (2017) 48.4 (2018)
Peru 2.1 (2019) solar 68 083 (2017) 26.2 (2018) (2017) 54.1 (2017)
Suriname 22.0 (2017) Surinamese dollar 72.8 (2018) 36 (2017) 48.7 (2017)
Uruguay 7.9 (2019) Uruguayan peso 63.5 (2018) 12 (2017) 60.8 (2018)
Venezuela 254.9 (2016) bolĂ­var soberano 105 598 (2017) 182.4 (2018) 3 (2017) 51.7 (2014)

The secondary sector, of industries, lost strength from the 1980s, but has been recovering, since the beginning of the 21st century, with the improvement of the population’s purchasing power, reduction of unemployment and economic and political stability. The most industrialized countries are Brazil, Argentina, Chile, Colombia, Venezuela and Uruguay. The main sectors are appliances, automobiles, textiles, metallurgy, naval and aviation.

The tertiary, services and trade sector is the sector that suffered the most from bad administration in the countries of South America. Transport is very deficient and does not seek continental integration, but rather the flow of production from the primary sector to ports. Thus, the subcontinent has few railways and highways that interconnect their countries. Although there is an extensive river network, it is little used. Commercial aviation is widely explored, especially in Brazil.

Tourism is one of the fastest growing industries in South America, mainly due to its natural attractions. In international trade, it is important to mention the MERCOSUR (Common Market of the South), an economic bloc that covers all the countries of South America, and which facilitated the commercial exchange, with the reduction of customs tariffs between the member countries.

Agriculture

Agriculture is the most important economic area in many countries in South America. The states are large producers and exporters of agricultural raw materials and foods such as coffee, grain, meat, wool or sugar cane. In addition, there are important deposits of many valuable natural resources in the countries of South America : iron and the steel refiners antimony, tungsten and manganese, the aluminum raw material bauxite, copper, tin and lead, saltpetre as raw material for the fertilizer production and the chemical industry, as well as petroleum.

Industry

Many South American countries have developed from pure raw material producers to emerging countries in the past decades.
Today, in the metropolitan areas of industry, e.g. B. in Brazil, Argentina or Chile, produces a wide range of industrial products, but they are not very competitive on the world market.
The main problem of the South American economy is the lack of qualified specialists. Secondly, there is a lack of capital. Due to the often unstable political conditions and weak currencies, there are only a few foreign investors who invest in industry. In addition, there is the widespread high level of debt in most countries. There is no continental traffic network in South America. The natural conditions, such as the impassable virgin forests in the tropics or the ridges of the Andean region, are very difficult for traffic access.
This was demonstrated, for example, by the Transamazonica project, the construction of a 5,600 km long connecting road between the north Brazilian Atlantic coast and the Peruvian border at the foot of the Andes, which started in 1970 and has not yet been fully completed.
Otherwise, the transport network is only well developed in the industrial regions. In addition to road and rail transport, coastal and river shipping also plays an important role for the transport of people and goods. In the large countries of Brazil and Argentina, the plane is also used as a common means of transport.

South America Economy

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