ABSTRACT
Latin America is facing a challenging historical moment. Its societies must choose between the way uphill to development for good or enjoying short-term benefits from the past 30 years of work. What will it be? How did one of the once wealthiest regions on Earth end up in this conundrum? What could help Latin Americans to solve it? In 2019, Latin American countries experienced the most profound social crisis since the reestablishment of democracy in the 1990s. Authoritarian regimes prevailed in some countries. In Brazil, Argentina, and Mexico, populist leaders conquered the ballot boxes. Peru suffered its worst political crisis in decades, and there was upheaval on the streets of Colombia, Bolivia, Ecuador, and Chile. What lies beneath the social unrest? Following Acemoglu and Robinson’s concept of “extractive institutions,” we will reflect on the institutional roots of Latin America’s malaise and its consequences to this day: the Dutch Disease, the excess of inequality, and the subsequent institutional mistrust. Latin American governments must institute deep reforms to turn the extractive institutions into more inclusive ones, avoiding long-term social crises. The region’s cooperation with the European Union might be one of the few solutions to get this done.
