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Latin America falls behind—again
Latin America falls behind—again
Oct 14, 2026 8:01 AM

Economic globalization has brought many economic benefits to the planet, but it’s also true that the benefits have been uneven. One continent which has lagged behind much of the rest of the world is Latin America. As a recent Wall Street Journal article entitled “Latin America Hangs On to Its Economic Gloom” pointed out:

This year, once again, Latin America is shaping up as an economic disappointment. Brazil’s economy likely shrank slightly in the year’s first half, and Mexico’s didn’t grow at all. Argentina is now tumbling toward another episodic financial crisis.

Then, of course, there is Venezuela, which won’t have much of an economy left after it shrinks another 25% to 35% this year. In the past six years, about two-thirds of its annual economic output has vanished, the second largest such decline for any country on record, according to the Institute of International Finance.

The sad thing is that this is not a new story. Certainly there are some important exceptions like Chile, but more often than not, the world south of the Rio Grande struggles to make the type of permanent economic breakthrough that translates into poverty reductions which last.

Part of the problem is that so many of the regions’ political, economic and religious leaders keep making the same mistakes. You would think that the disastrous effects of Peronist populism and policies in Argentina, for example, would have been enough to persuade those Argentine politicians who actually care about mon good that they need to cast off the malign influence of the thought and style of a man who has been dead since 1974. Instead, the same fiery rhetoric, contempt for rule of law, cultivation of envy, and systematic double-dealing is repeated over and over again.

But one can’t only blame the region’s economic challenges upon those Latin American politicians who persist in peddling bad ideas. Many ordinary people vote consistently for these political leaders—year after year, decade after decade. In other words, it’s not just elites that are at fault. Millions of everyday citizens plicit as well.

But maybe the real challenge is that there is no easy way for Latin America to turn the corner without fundamental cultural transformation. As anyone who has spent time in the region knows, deeply-ingrained attitudes of skepticism and cynicism which prevail throughout much of Latin America towards institutions like private property and rule of law number among the biggest problems undermining the ability of so many Latin American economies to promote consistent and lasting economic growth.

Moreover, these attitude-issues are a sickness beyond the power of politicians and governments to cure. Yes, legislators can help change incentives for certain forms of behavior. But what counts for long-term institutional development is for people to start making different choices and acting in different ways. And that is hard enough for an individual, let alone an entire society, to undertake successfully.

In the end, culture matters—more perhaps than most of us realize, especially in economic life, and, it seems, particularly in much of Latin America.

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