With foreign capital, Latin American countries were able to develop mining and agriculture. Chile exported copper and nitrates. Argentina expanded its livestock and wheat production. Brazil added coffee and rubber to its traditional cash crop of sugar. By the early 1900s, both Venezuela and Mexico were developing profitable oil industries.
Throughout the region, foreigners invested in modern ports and railroads to carry goods from the interior to coastal cities. As in the United States at the time, European immigrants poured into Latin America. The newcomers helped to promote economic activity, and a small middle class emerged.
Thanks to trade, investment, technology, and migration, Latin American nations moved into the world economy. Yet internal development was limited. Local industries grew slowly, in part because of the social structure.
The tiny elite at the top benefited from the economic upturn. Their wealth grew, but very little trickled down to the masses of people at the bottom. The poor earned too little to buy consumer goods. Without a strong demand, many industries failed to develop.
What were some negative effects of foreign investment in Latin America?
As Latin American nations tried to build stable governments and develop their economies, the United States expanded across North America. At first, the young republics in the Western Hemisphere looked favorably on each other. Simón Bolívar praised the United States as a “model of political virtues and moral enlightenment.” In time however, Latin American nations began to feel threatened by the “Colossus of the North,” the giant power that cast its shadow over the entire hemisphere.
In the 1820s, Spain plotted to recover its American colonies. Britain opposed any move that might close the door to trade with Latin America. Britain asked the United States to join it in a statement opposing any new colonization of the Americas.
American President James Monroe, however, wanted to avoid any “entangling alliance” with Britain. Acting alone, he issued the Monroe Doctrine in 1823. “The American continents,” it declared, “are henceforth not to be considered as subjects for future colonization by any European powers.”
This diagram shows the cycle of economic dependence in Latin America. What did developed nations provide to Latin America?
The United States lacked the military power to enforce the Monroe Doctrine. But with the support of Britain's strong navy, the doctrine discouraged European interference.