ABSTRACT
This chapter introduces the economic challenges that the region faced after independence and through 1870. To defend their new independence, Latin American nations issued securities to European investors, accruing large sovereign debts to finance their new nations. Through 1850, however, the threat of new invasion and infighting meant that almost all countries entered default on their loan payments. Haiti, saddled with incredible debt in a tradeoff for France to recognize its independence, suffered the greatest debt burden. As military financing took up the bulk of national budgets, educational gains and public works lagged. Investment in railroad infrastructure largely had to wait until after 1850, as countries became more stable, and credit loosened with liberal reforms. In some areas, like Mexico, the shift toward liberal reforms ushered in renewed infighting and political instability. Ultimately, the economic and development costs of political and social instability was high in the region. The region, which at independence started off arguably on par or better than the United States and Canada, had fallen behind by 1870.
