InsightsTHE ORPHAN SUBCONTINENT  

THE ORPHAN SUBCONTINENT  

Latin America in the 21st century. 

Many people ponder the destiny of major powers like the United States, Europe, Russia and China in the 21st century. Yet very few ask what the future holds for Latin America, except for which big powers or sets of powers will control its raw materials and domestic markets. Even if, by population, Latin America could be one of the big players in defining the world’s destiny—or at least its own destiny—people tend to speculate what could happen to it rather than what it will do.  

Until now, Latin America has been a subcontinent devoid of agency. Such lack comes from two dimensions: having never fully industrialised, its countries remain dependent on primary production and having never fully lived in freedom, their democratic institutions are weak and the countries are prone to fall into vertical regimes. Backwardness kept Latin America soft in those past centuries, but the power of Spain, first and then that of the United States, kept the region safe within the Western sphere.  

Will the 21st century be like this?  

Even if Latin America fell behind during the Industrial Revolution, it remained well within the cultural and economic sphere of the West. This is rapidly changing because Western societies seem to have lost their self-esteem and Latin American countries look elsewhere as potential sources of new ideals.

Moreover, Latin America is falling well behind the developed side of the West regarding the current technological revolution, which has debilitated the country’s ability to maintain the American global order. This is leaving a power vacuum worldwide, particularly in Latin America.

Our epoch is marked by a technological revolution that is changing our global society as radically as the Industrial Revolution, which multiplied the power of the muscle. This multiplies the power of the mind. The changes it elicits are so fundamental that it is shifting the domestic and global equilibria of power.

While knowledge has always been the ultimate source of growth and development, its importance is increasing exponentially, giving a decisive advantage—economically, politically and militarily—to those societies that can develop new knowledge and take advantage of it. A well-developed educational system, including the incoming power struggles, will be crucial in the emerging world.

The difference in GDP per capita and general quality of life between developed and developing countries is already so significant that it has reversed the 19th-century migrations from Europe to the then-developing or underpopulated countries. Now, migration is going in the opposite direction and unlike in the 19th century, it is causing grave adjustment problems in the recipient countries. 

This trend is reinforced by the global reduction in population growth, which affects the entire world except Africa but is worse in developed than developing countries. Thus, a new source of conflict is emerging. Developed countries need foreign workers, but their arrival and stay are causing deep cultural problems. The northern part of Latin America is already a source of massive immigration to the United States, both legally and illegally. 

Demand for new strategic commodities  

The technological revolution opens up new opportunities for Latin America in primary production and nearshoring. This includes replacing industrial production facilities in China and other Asian countries with Latin American investments. Additionally, there is a growing demand for various new materials that are abundant in Latin America.

Latin America is a prime candidate for nearshoring because it is close to the United States. Yet, with few exceptions like Costa Rica, Uruguay, Chile and Mexico in some areas, the region lacks basic education and specialised training to perform the tasks required in massive quantities of high-value-added industrial production. Even those countries cannot be sure they will become long-term partners with the United States because it seems increasingly unable or unwilling to honour long-term promises.  

As in the rest of the world, the United States is suffering from a persistent erosion of its social cohesion and institutional setting. At the moment of this writing, the results of the 2024 presidential elections are in doubt. It is clear, however, that if Donald Trump wins, the United States will not honour many of its past promises to its allies. It may even abandon NATO. Many could say he is only bluffing and will do something different when in power.

Yet, in these matters, just the insinuation that a country could do it is equivalent to having done it, and, of course, doing it to Ukraine is the same as having done it to the allies the United States wants to gather around it to oppose China. Thus, Latin America, from the fence, cannot be sure that any American promise will be honoured. This is an incentive to look for the possibilities offered by China, Russia and Iran, but it would be a stupid move from Latin Americans. But the case of Venezuela, Cuba and Nicaragua, and the increasing coquetries of many other countries to the Americans’ enemies, shows that these have many ways to enter the heart of Latin American politicians.  

The United States has lacked a long-term policy toward Latin America for decades. Over the last ten years, day-to-day policies have drifted toward dealing with two issues: promoting Latin American governments that support the American fight to stop drugs and migrations going to the United States, regardless of anything else. It would be an exaggeration to say that Latin American governments have been able to do whatever they wanted with others if they helped or said they helped to attain those objectives. Still, in many countries in the region, governments design their policy toward the United States on such bases. And the United States has complied, especially in Central America.  

In the meantime, taking advantage of the narrow-mindedness of such a policy, American enemies have fortified their positions in Latin America to an unprecedented point. Those enemies will not capture the entire subcontinent, but they already have captured at least three countries—Cuba, Nicaragua and Venezuela—and could capture several more shortly. Their bastions there are positioned to at least bring any global war to Latin America.  

War in the subcontinent?  

The region was fortunate to escape being a battlefield during the two world wars of the 20th century because the United States could enforce the Monroe Doctrine. This cannot be taken for granted nowadays. The United States is losing social cohesion and moving toward absurd isolationism. Latin American countries have been left to their capabilities to protect their natural resources and freedom. Since these capabilities have weakened, extra-continental powers are invited to assert themselves.  

Without the United States’ consistent support, Latin America is unlikely to resist the advances of the enemies of the West. Its traditional lack of social cohesion has resulted in a lack of democratic roots, weak human capital, uncertain institutional development and a tendency toward vertical, authoritarian governments, which become vulnerable to the offers of those enemies. Those include not just Russia, China and Iran but also narco-traffickers. All of them are already allied in Venezuela, the gangsters providing huge bribes to have the politicians and the army content. A repetition of the Venezuelan and Nicaraguan experience is not unthinkable in Central America.  

Thus, Latin America would be split for the first time in history in the case of a world war, either cold or hot, and the signs of such a split are already visible. The cost of allowing the entrance of the enemies of the West in Latin America is already very high. Allowing further penetration would increase this cost exponentially for Latin America, the United States and the West.  

What can be done? 

Stopping the penetration of Latin America by authoritarian powers in conflict with the West requires helping the region to become full members of the West. The old protocol of the 20th century—providing grants and credit to governments—has proved ineffective. Eighty years of applying it has not produced the required progress.  

Lately, however, the United States seems to be hitting the target with a programme oriented to incentivise American companies to invest in Latin America. This includes local partners to carry out the nearshoring that the United States needs to do while helping Latin America jump-start its transition to the industrial and knowledge era (Latin America Nearshoring Act). To be effective, this law should include tax treatments and free trade agreements.  

This is what the United States did to China starting in the 1970s. Of course, many other things are needed to launch a period of firm development, but these will come once the Latin American economies begin their industrialisation. Development should be started in the private sector and then moved to the public sector—the model that succeeded in China economically—and not the opposite—the model that failed in Latin America.  

Such an agreement would stop illegal immigration, allowing the United States to regulate the inflow of people the country needs to compensate for a potential reduction of its population.  

Up to now, the problem has been defined as the need to stop the traffic of drugs before it reaches the borders of the United States. Trying to stop the supply from reaching the borders has generated an enormous chain of transportation from the depths of Latin America to the frontier of Mexico and the United States.

In terms of criminal cartels’ fight for control, especially in Mexico, an integral solution must include the liberalisation and regulation of the drug markets to end with the criminalisation of its transportation. After so many years, the current policy has witnessed a worsening of the addictions in the United States, an increasingly bloody gang war and the corruption and partial or total taking over of some Latin American countries.  

The most difficult step  

The most challenging step in salvaging Latin America is nudging them into adopting liberal democracy and persevering in this direction. The United States and Europe could help in this task. The main problem is that, in a self-destructive way, many of the people who go to Latin America to help build a culture of liberal democracy carry the opposite message and say that the West is in terminal decline and democracy is exhausted, as if the alternative, tyranny, would be better.  

To thrive, Latin America must address educational deficits, leverage its strategic resources and navigate complex geopolitical landscapes. The United States’ waning influence and the region’s attraction to authoritarian powers further complicate the scenario. Comprehensive support could foster industrial and democratic advancements, stabilising Latin America and integrating it more fully into the Western sphere. However, it cannot escape the existential problems of the West. 

About the Author

Manuel Hinds
Manuel Hinds
Manuel Hinds is a Fellow at the Institute for Applied Economics, Global Health, and the Study of Business Enterprise at Johns Hopkins University. He shared the Manhattan Institute's 2010 Hayek Prize and is the author of four books, the last of which is In Defense of Liberal Democracy: What We Need to Do to Heal a Divided America. His website is manuelhinds.com
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