Unit 1 / Learning environment 1

Essential reading

Economic, social, political and

cultural context of the American
continent

Index

1 Geographical features

2 Cultural aspects

3 Demographic features

4 Economic aspects

5 Political aspects

Key words: geography, development issues, transparency, competitiveness.

1. Geographical features
The American continent is located in the occidental hemisphere and is the second largest territory
in the world after Asia. It has an approximate area of 42 million of Km2 and extends from the glacial
Arctic Ocean at the north to the Diego Ramírez islands at the south. Due to its cultural diversity
and great extension, the continent is usually divided into North America, Central America and the
Caribbean and South America. America is the second most populated continent of the world with
1041.043 million inhabitants.

Because of the conditions in which it was occupied and integrated to the world’s economic, political
and cultural circuits in the 15th century, this region has been classified as the New World, even
though its history goes back to the first settlers from Asia in 40.000 BC.

According to Unesco (1975):

Because of its geographical position, America has the greatest territorial autonomy of all continental
lands, individualized from the rest of the other continental sets, and separated from them by the two
great oceanic masses of the Atlantic and Pacific, oceans that currently have the highest density of trade
routes, both aerial and maritime. (p. 5).

As stated by the National Geographic Society, North America can be divided into five large regions:
“the mountainous west, the Great Plains, the Canadian Shield, the varied eastern region, and the
Caribbean. Mexico and Central America’s western coast are connected to the mountainous west, while
its lowlands and coastal plains extend into the eastern region” (National Geographic Society, 2018).

On the other hand, Central America, the Caribbean and South America are usually named as Latin
America, which includes Mexico for its cultural closeness, but geographically this country has been
previously included as part of North America. Latin America is divided into five geopolitical regions:
Central America, the Caribbean, the Guianas, the Andean countries and the Southern Cone countries.

The American territory, in general, has a wide diversity of climates, ranging from rainy and warm
tropics, characteristic of the strip that goes from Mexico to the Brazilian territory; desert climates,
such as those of the southwestern strip of the United States or the northern Chilean tip; to cold
climates near the poles.

Also, the American continent has extensive geographical accidents, major mountain systems such as the
Andean Mountains, the Rocky Mountains in North America and the Brasilia Massif. The western strip of
the continent is in the Pacific Ring of Fire which makes this region susceptible to high seismic activity.

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Regarding water sources, the continent has a wide variety of rivers whose extensions vary from the
near 7000 Km of the Amazon River to the short rivers in Central America. The continent’s water
reserves are among the largest in the world, being particularly important the Guarani Aquifer, a
subterranean reservoir located in Paraguay, Brazil, Argentina, and Uruguay.

In this way, the strategic geographical location and the wide diversity of the continent represent
global advantages regarding production and heterogeneity within the territory.

2. Cultural aspects
Indigenous tribes with polytheistic religions originally populated the American continent. After the
arrival of Europeans and the process of evangelization, the population of the continent is mostly
Christian with a greater influence of Protestant Christianity in North America and Catholicism in
Latin America. Although the main religion is Christianity, it is usual to find several religious mixtures in
Latin America, for example, some rituals that combine Santeria and Catholicism.

Traditions in America are syncretic and a mixture of diverse belief systems and cultural practices of
the original settlers and the societies that occupied and established themselves in the territory since
de 16th century. For example, in Central America colorful rituals are intended to be a link between
the world of the living and the world of the dead to celebrate the return of the ancestors. Also, there
are celebrations and carnivals related to several religious festivals such as Holy Week. Within these
traditions stands out the Carnival in Rio de Janeiro, Brazil.

Regarding music and the arts, it is evident a cultural mixture of a wide diversity that arose from the
encounter of European and African traditions with the cultural practices of the indigenous inhabitants
of America. An example of this mixture can be seen in the music of the United States, where the
influence of African music led to the Blues, Jazz, Rock n Roll and Country music is the result of an
European influence mixed with African rhythms.

In South America, the native rhythms of the indigenous people are characterized by the use of wind
instruments and drums used to honor the gods and celebrate the harvests. The arrival of the Spanish
colonists subsequently paved the way of new rhythms, like the bambuco (Miñana Blanco, 1997).

In addition to this diversity, the differences within the continent also extend to the field of
business. According to Jodie Gorrill (2007), in North America there are particular cultural
elements that stand out:

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 • Individualism: in the US it plays a significant role in the lives of many Americans. American
culture emphasizes individual initiative and personal achievement.

• Low context culture: Americans are task-centered, and thus the primary purpose of
communication is to exchange information, facts, and opinions.

• Egalitarianism: equality is an important element of American culture, there is a collective

understanding of the notion of equality that underlines many social relationships in the US.

On the other hand, Chalmers (2018) identifies these relevant cultural elements of Latin America in
business field:

• Warm, friendly and expressive: people shake hands on arrival and when leaving or ending a
meeting. Latin America associate's handshake may seem limp and will linger longer than in North
America or Europe.

• Schedules are not always strictly adhered to in much of Latin America.

• Use of jargon or colloquialisms could cause confusion and the tone of an e-mail may be
misinterpreted. Business correspondence is more formal in Latin America than in other
countries, because the use of elegant language denotes good manners.

While in North America the negotiation processes are advanced in an area of punctuality,
competence and without the need to develop personal relationships, in Latin America punctuality it is
not decisive, the environment is less competitive compared to that of North America, and the use of
social conversations before conducting business is usual.

3. Demographic features
The demographic growth of the American continent accelerated in the year 1950. However, in
recent decades, according to the population division of the United Nations, the natural rate of
population growth (difference between birth rates and mortality without considering the migrations)
has been reduced and remains between 2 % and 3 % for the case of South America and Central
America and around 1 % for North America:

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 -2% 1% 3% 5%
No data 0% 2% 4%

Figure 1. Natural population growth, 2015.

Source: UN Population Division (2017A).

Infant mortality rate and life expectancy at birth are measures of the welfare of a society from a
demographic point of view. Both factors show a favorable evolution for the continent with the rest of
the world. Figure 2 shows the evolution of the infant mortality rate from 1950 to 2015. The highest
rate is presented often in the Caribbean, while the lowest is in North America. These indicators
also correspond to the level of development since the more developed countries guarantee better
public health systems that reduce infant mortality. As a consequence, in the case of the Caribbean
and South America countries, the guarantees offered by public health systems for the survival of
newborns are lower than those found in other regions of the American continent.
140
120
100
80
60
40
20
0

Caribbean Central America South America North America

Figure 2. Infant mortality rate per thousand live births (1950-2015).

Source: own elaboration based on United Nations, Population Division (2017B).

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On the other hand, Figure 3 shows the life expectancy at birth that has advanced, in the case of
Latin America and the Caribbean, from 50 years to 65 years, and from 70 to 80 years in the case of
North America for the same period. As it was said previously, it is also evident that, in demographic
terms, the North American block shows a better performance than the rest of the continent. The
explanation for these conditions is related to the development levels of each block.

90,00
80,00
70,00
60,00
50,00
40,00
30,00
20,00
10,00
0

La�n America and the Caribbean North America

Figure 3. Life expectancy at birth in Latin America y North America (1950-2015).

Source: own elaboration based on United Nations, Population Division (2017C).

4. Economic aspects
In the economic side, growth and development are proper indicators to study the evolution of
the continent. According to Cameron and Neil (2014), growth is "the sustained growth of the
total production of goods and services generated by a given society" (p. 24). Whereas the term
development means the "economic growth accompanied by a substantial variation in the structures or
the organization of the economy" (p. 24).

The general performance of the economies of America in the post-war period has been favorable
regarding growth. The United States grew rapidly with capital exports promoted after 1950,
experienced a slowdown in the 70s and had a subsequent recovery that lasted until the 2008 crisis.

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In the case of Latin America, growth was favorable after the Second World War and until the 80s,
when it experienced a prolonged recession as a result of the debt crisis. Latin America grew in the
90s with a process of trade integration but at a lower rate than the preceding period.

Recent growth figures show that in the context of the global economy, North America is one of
the blocks with best economic performance, with an annual Gross Domestic Product (GDP) of
more than 40,000 dollars per capita. This level of production is comparable with the economies of
the Nordic countries, Australia, and New Zealand and close to the European averages. Meanwhile,
Latin American countries have a GDP of 20,000 dollars per year, ranking this region above
African economies and below North America and Europe. The region has some disparities: Chile
has the highest GDP while Haiti, Paraguay, and Bolivia have production levels inferior to the rest of
the countries.

No data $0 $5,000 $10,000 $20,000 $30,000 $40,000 >$50,000

Figure 4. GDP per capita, 2016.

Source: Maddison Project Database (2018).

Despite its favorable position concerning production in the global context, the economies of the
continent have a structural problem related to growing inequality, a fact that marks a differential
regarding development. According to the World Bank, the richest 10 % of the population concentrate
between 40 % and 50 % of the wealth, being Brazil, Mexico, Chile and Colombia the most unequal.
The following figure shows the distributive pattern:

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Figure 5. Income Share Held by Richest 10 %, 2015.
No data 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% >50%
Source: World Bank, (n.d.).

In terms of income poverty rate, which corresponds to the proportion of population living with less
than 1.9 dollars per day (2011 prices), the evolution is positive, since less than a 10 % of the population
is in this condition in Latin America, except for Haiti, where 53% of the population lives in this
condition (2014 data). Therefore, it is possible to assert that the American continent has experienced
a sustained increase in production in recent decades, but it still has development problems that are
more evident in the Latin America’s countries than in North America.

Besides, North America’s performance in trade openness and export share over total production is
higher than Latin America’s economies. As shown in Table 1, since 1870 North American countries
have had between 10 and 26 % of total production share, with its maximum degree of openness at the
middle of the 20th century. In contrast, Latin America’s export share has evolved since 1870 from
3 % participation to approximately 12 % in its maximum commercial openness, during the nineties of
the 20th century.

Moreover, evidence shows that the south of the continent’s commercial integration has been
historically low and have increased recently, in particular with the third wave of globalization that
started in 1990, ending a long period of protectionism and industrialization that lasted since the 1929
crisis until 1970 (Bértola & Ocampo, 2011).

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The degree of integration of the United States and Canada is comparable to that of countries such
as Great Britain, while Latin America rates maintained similar to the ones of Eastern European
countries. However, these similarities are only associated with the participation of exports over total
production, the productive vocation of these countries does concentrate some differences.
Table 1. Trade in value by partner (current exchange rate percentage)

1870 1913 1929 1950 1973 1990 1998

Western Europe 65,7 56,3 47,4 38,6 50,3 51,9 47,4
Great Britain 21,7 15,0 12,1 12,0 5,8 6,1 5,6
Continental Countries 44,1 41,3 35,3 26,6 44,6 45,8 41,7
Central and East Europe 5,8 6,0 6,6 7,8 9,2 5,4 4,9
US and Canada 10,3 16,4 21,4 25,3 19,1 17,0 18,6
Other industrialized
2,8 4,7 6,2 5,7 9,6 11,0 9,5
countries
Latin America and the
4,9 7,2 7,9 9,3 3,9 3,5 5,0
Caribbean
Developing Asia 10,6 9,3 10,5 7,9 5,1 9,5 13,1
Africa 5,4 2,9 1,7 1,5
World 100 100 100 100 100 100 100
Source: Politécnico Grancolombiano, adapted from ECLAC (2002).

4.1. Competitiveness

According to the most recent World Economic Forum report, published in 2017, which measures
the performance of 137 economies worldwide considering the set of institutions, policies, and factors
that determine the level of productivity, the United States is the second most competitive economy
of the world after Switzerland, followed by Canada, which ranked 14th. For its part, Chile is the Latin
American economy with the best performance, ranking 33rd; other Latin American economies
occupy intermediate positions within the ranking, and Venezuela and Haiti are the worst performers,
ranking 127 and 128 respectively.

Furthermore, as exposed in the report, Latin America competitiveness is affected by:

The slow response of exports […] Large gaps in institutions, infrastructure, labor market efficiency, and
innovation. The wide range of performance exhibited in the region also contributes to regional inequality
(World Economic Forum, 2017, 28).

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For its part, North America stands out as the best performing block, but the report also proposes
important challenges such as:

Securing the free flow of goods, people, capital, and services within the North America Free Trade
Agreement with Mexico; investing in human capital, both health and education; and consolidating the
basic requirements of competitiveness that lag relative to other advanced economies while at the same
time protecting their advantage in innovation and business sophistication and the efficiency of their
markets (World Economic Forum, 2017, 31).

In conclusion, the need for a higher level of innovation, business development, and social progress,
especially in health and human capital formation, are common in American countries. However,
institutional environments and infrastructure are different among the countries of Latin America,
which is identified as a front that requires of greater amounts of investment in infrastructure and
technological capabilities in order to guarantee business attraction.

5. Political aspects
The evidence shows that within the continent the disparities are diverse; historical, cultural and
economic trajectories have been differentiated and disparate from the origin. In the political terrain,
the blocks within the continent also exhibit unequal patterns, and it is precise to this aspect that the
origin of the differences between North and South America are attributed. Douglass North and Robert
Thomas (1978) argue that the creation of more stable institutions in North America is the cause of their
economic success; thus, these countries have had widespread respect for private property and a set of
norms that are maintained over time, giving legal stability and guarantee for investments.

Also, North American countries have had more favorable weather concerning political and
democratic orders with higher levels of transparency than those of Latin America and the Caribbean.
This is shown in Figure 6, which presents the corruption perception index: Canada is the country with
the lowest number, while Venezuela and Haiti rate high on the chart.

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 No data 0 10 20 30 40 50 60 70 80 90 100
Figure 6. Corruption Perception Index, 2018.
Source: Transparency International (2018).

In relation with democratic order, North America has maintained it for more than 50 years, and the
United States for more than 150 years; in Colombia, it has been preserved for 50 years and in other
countries of Latin America between 20 and 40 years. In contrast, Venezuela stands out for currently
having a non-democratic regime.

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References
Bértola, L. & Ocampo, J. A. (2011). Desarrollo, vaivenes y desigualdad: una historia económica de
América Latina desde la Independencia. Madrid: Secretaría General Iberoamericana.

Cameron, R. & Neil, L. (2014). Historia económica mundial. Madrid: Alianza Editorial.

Chalmers, E. (2018). Business Etiquette in Latin America. Retrieved from https://www.lanzbc.co.nz/

assets/Resources/Business-etiquette-FINAL.pdf

Gorrill, J. (2007). Communicaid Group. Retrieved from http://www.legacyintl.org/pfp/wp-content/

uploads/2010/04/Doing%20Business%20in%20the%20USA.pdf

Miñana Blasco, C. (1997). Caminos del bambuco en el siglo XIX. A contratiempo 9, 7-11.

National Geographic Society. (2018). North America: Physical Geography. National Geographic.
Retrieved from https://www.nationalgeographic.org/encyclopedia/north-america-physical-
geography/

North, D. & Thomas, R. (1978). El nacimiento del mundo occidental. Madrid: Siglo XXI Editores.

Unesco. (1975). Geografía de América Latina. Barcelona: Editorial Teide S.A.

World Economic Forum. (2017). The Global Competitiveness Report 2017-2018. Geneva: World
Economic Forum.

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Figures references
ECLAC (2002). Trade in Value by Partner (Current Exchange Rate Percentage). Retrieved from
https://repositorio.cepal.org/bitstream/handle/11362/2724/2/S2002024_es.pdf

Maddison Project Database (2018). GDP per capita, 2016. [Map]. Retrieved from https://
ourworldindata.org/economic-growth

Transparency International. (2018). Corruption Perception Index, 2018. [Map]. Retrieved from
https://ourworldindata.org/corruption

UN Population Division. (2017). Natural Population Growth, 2015. [Map]. Retrieved from: https://
ourworldindata.org/world-population-growth

UN Population Division. (2017B). Infant Mortality Rate per Thousand Live Births (1950-2015).
[Map]. Retrieved from https://population.un.org/wpp/Download/Standard/Mortality/

UN Population Division. (2017C). Life Expectancy at Birth in Latin America and North America
(1950-2015). [Map]. Retrieved from https://population.un.org/wpp/Download/Standard/Mortality/

World Bank. (n.d.). Income Share Held by Richest 10 %, 2015. [Map]. Retrieved from: https://
ourworldindata.org/income-inequality

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 TECHNICAL INFORMATION

Module: Cultura y Economía Regional de Europa

Unit 1: Context and history of the American continent
Learning environment 1: Economic, social, political and
cultural context of the American continent

Author: Claudia Milena Pico

Pedagogical Advisor: Estefanía Ferrero Marciales

Graphic Designer: Cristian Navarro
Assistant: Ginna Paola Quiroga Espinosa

This material belongs to Politécnico Grancolombiano

Its partial or total reproduction is prohibited

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