Book Review John.

H Coatsworth, Inequality, Institutions and Economic Growth in Latin

America.

Coatsworth, John, H. Inequality, Institutions and Economic Growth in Latin America. Cambridge
University Press, United Kingdom. 2012 545-569p.

John H, Coatsworth, an expert and leading scholar of Latin American economic and international
history, has been involved in the academic world as Dean of SIPA for a four-year period. He was
a member of the faculty at the University of Chicago (from 1969 to 1992). He received a PhD in
economic History from the University of Wisconsin- Madison. Also, he has received numerous
research and institutional grants from public and private foundations. He is currently the provost
of SIPA, a member of the American Academy of Arts and Sciences, the council on foreign
relations, and the board of Directors of the Tinker foundation. As a Writer, he has written eight
books and many scholarly articles focused on comparative social, economic and international
history of Latin American especially Mexico, Central America and Caribbean countries. For
example, His most recent book is called Living standards in Latin American History: Height,
Welfare and Development, 17502000.
One of the main purpose of this essay is to show the causes and consequences that have been
presented in the Latin`s America political economy and its corresponding financial
backwardness. His approach is focused on explaining the origins of contemporary
underdevelopment in colonial institutions connected to inequality. However, His contrasting
view supports the importance of institutional limitations by arguing that they were not considered
from colonial inequalities, but from different modifications of Iberian practices to the American
colonies under weak conditions. It has been found new works that turn much of what it is
conceived different from Marxism, Dependency schools, and Modernisationist writings to be
considered by scientific methods which are linked to contemporary struggles against
underdevelopment.
This essay is divided in five sections that look forward to explaining through the formulation of
three simple questions why the political economy of Latin America has affected dramatically its
development in regards to other countries.

The first facet is designated by a question what needs explaining? It means that there are
several factors that need to be explained with the aim to understand the reasons that guided Latin
America to the downfall in terms of economic growth and productivity between 1700 and 1850.
In this period of time, America Latina was not considered underdeveloped until European
technology and organization reached new and even greater achievements with the introduction of
sugar cane and the importation of millions of African slaves to cultivate and process it. Whereas,
the initial productivity from the Spanish conquest started to diminish in the early seventeenth
century. As long as economic performance in the rest of the world remained difficulties and
problems, Latin America`s abundant and accessible natural resources kept it to reach the top of
the heap. That is because there were three relevant and basic historic transformations that
increased per capita GDP in the Americas well above the achievements of most advanced
societies. First, the idea of the Americas to have business with the rest of the world. Second, the
idea of bringing a more systematic technology and organization. Lastly, the presence of two
catastrophes such as the devastation of indigenous populations as well as the forced migration of
millions of Africans to the new world.
The second section has been called The fall from development. It is dedicated to expose three
different theories, but seem to be complementary. Each one seeks to explain the backwardness by
contrasting Latin America`s trouble past with successful colonies such as United States.
According to Engerman and Sokoloff, sustained in their first theory based on differences in
factor endowments that is to say in both natural resources and labor supply were the ones in
charged to produce high concentrations of land in ownership of the Portuguese and Spanish
colonies (7) They also argue that in order to exploit Latin America`s natural resources, it was
required workforce to facilitate a better productivity. However, this unfair process led to the
creation of unequal societies in which settler elites abused of their authority and exploited the
majority indigenous or imported slaves. The second theory, given by Acemoglu, Jonson, and
Robinson who claim that inequality was important to create extractive institutions in the sense
that it was not originated in the geography of the natural resources , but in historic inequalities
of status and power. (10). In other words, this shows a positive view for small settler elites
which can dominate big native populations by excluding majorities from power and failed to
protect their human rights and properties. The last theory, but not least on the fall from
development focuses on the source of Latin America`s economic backwardness in the lack of

effectiveness from the economic model, Spain`s mercantilist. Mercantilist empires aimed at
extracting resources through the use of a dependent labor force without having to change any
economic structure. (17). It means that the opposite liberal empires undoubtedly work best for
economic development because of its developer ideas about trades and markets.
In section 3, starts with a sort of interesting question How did Growth Begin (part one)
Coatsworth cites the principal idea coming from Lange`s model The connection between
colonial institutions and the timing and intensity of institutional modernization in the postindependence era. (20)This destructive phase of institutional modernization of Latin America in
the nineteenth century paradoxically led to a second phase more constructive that linked with the
starting point of unexpected economic growth. It included reforms in modern constitutions, legal
codes, insuring and mining laws along with fiscal, tariff and public debt reforms that were
distributed between the political powers like provincial and central governments. Finally, the
economic growth made possible and facilitated a huge increase in the state affairs, reflected in
the investments of public goods, including education, infrastructure and public health. Its
accelerated pace of nineteenth century institutional modernization with its economic aspects
played an important role as a predictive variable of the economic growth that go against colonial
exploitation and extraction ideas.
Section 4 is titled as the second part of the question How did Growth Begin (part two). It
basically explains that institutional modernization, political sustainability, and economic growth
were evident causes in most parts of Latin America in the nineteenth century. It establishes fourth
various explanations about transformations in the new works of the political economy. First, it is
highlighted the highest levels of rising international demand for Latin America exports in order
to increase international capital flows. Although, this considerable economic environment was
not enough to get growth started. The second conception points out that institutional
modernization was the main contribution to gain success. The principal achievements of the
liberal victories through Latin America included the most known abolition of slavery. Others
aimed that Latin America fulfilled economic growth by creating political stability. Briefly,
through the use of mechanisms to promote the resolve of conflicts among elites and between
elites and workers. The final theory supports that neither democracy nor stability is needed to get
economic growth. On the contrary, it is believed that the solution is to induce members of the

economic elite to invest in the financial institutions and productive activities instead of let them
to expropriate properties. Indeed, as long as economic growth guided by exports could take off in
Latin America, there was an evident increase of economic inequality. It is controversial in the
fact that the more a nation earn, the more a population is falling to see its downfall. What`s the
issue? Does it come from the multiple colonial era`s sins in terms political economy
management? We do not know yet. However, surely what our judgements rely on the high
economic inequality because of the government`s dominance by narrow economic elites. For
example, Santo Domingo and Ardila Lules wealthy families in Colombia. Similarly but in other
contexts, were seen the exclusion of competing interests and groups from political influences,
and bad institutions that failed to protect the human rights of majorities.
The last section is called Why Has Latin America Grown so Slowly? It is a fact that economic
growth of Latin America has not been fast enough to achieve transformations in terms of
productivity and living standards of a developed world. Somehow, the previous economic
models to become a developed county are not considered as the appropriate ones. Why not to
think about a model that do not go to extremes which facilitate Latin America growth. We have
still that big question in our minds to decide whether a transition between socialist and capitalist
ideas. Perhaps one that come together to make a new kind of political economy in which credible
institutions can effectively guarantee property and civil rights as well as look for better
opportunities to access to public goods, free education, an excellent health service for every
citizen without exclusion and expropriation.
This argumentative essay has a well- organized structure that is composed by questions, factual
information and easy titles to be understood by someone who is not an expert on economy.
Coatsworth is really assertive in explaining different approaches to see the problem of the Latin
America in terms of economic growth and its relationships with institutions that are crucial to
identity whether a Latin-American country is considered wealthier and poorer compare to the
potential countries. Also, he exposes contrasting views that differ and complement each other to
assure that there is not a solid and singular answer to the question. However, his posture is
clearly evident pointed to judge narrow elites and institutions for its wealthy and power
established over vulnerable and under conditions societies. This essay is a really good example
of showing the real things and events that turn positive and negative Latin America because there

is useful information that help to construct knowledge about the inequality and devastated
conditions people lived in the past. The author is be able to explain the origins, causes and
consequences, the post and contras of having economic models and regimes that looked for
empowering themselves by affecting others through the creation of bad institutions linked to
inequality or others that looked for the wellbeing of societies and a well-developed Latin
America.