A combination of blood, faith, character and luck drove development in North and South America at a staggeringly different pace, resulting in today’s bifurcated hemisphere.ANTHONY DEPALMAJULY 3, 2026
On the same September morning that terrorists slammed hijacked airliners into the World Trade Center and the Pentagon, the foreign ministers of 34 North, Central and South American nations had gathered in Lima, Peru, to sign the Inter-American Democratic Charter. The Charter was considered a critical step towards forming a Free Trade Area of the Americas that would usher in unprecedented economic progress for the entire region and narrow the yawning development gap between North and South.
Signing the document was such a priority that even after US Secretary of State Colin L. Powell was briefed on the unprecedented nightmare unfolding at home, he delayed his departure from Lima until all the signatories had put their names to the document.
The push to form a hemisphere-wide free-trade zone backed by a vow of allegiance to democracy was just one of the myriad initiatives waylaid by 9/11. In the succeeding years of the war on terrorism, free trade and open borders became suspect, anti-globalisation forces hardened and international commerce was extensively restructured. By the time the Free Trade Area of the Americas (FTAA) was abandoned in 2005, it had already been largely forgotten, along with the question that its gestation had so powerfully raised: why have North and South America taken such divergent paths and reached such asymmetrical levels of development?
It is a question I’d been exploring for nearly a decade by then, and on that morning in 2001 I had narrowly avoided taking a flight aboard one of the doomed jetliners to kick off a continent-wide speaking tour for my book Here: A Biography of the New American Continent. In it, I had written that in the lead-up to enacting the North American Free Trade Agreement (NAFTA) in 1994, Mexican leaders contended that economic conditions along both sides of the US-Mexico border were so historically out of proportion that signing the agreement was the only way to increase parity, decrease inequality and limit illegal immigration. In other words, Mexico felt it was time to even the score.
In addition to the book tour starting that infamous day, I was scheduled to call some of the delegates in Lima as part of my work as the New York Times’ first international business correspondent for the Americas, a reflection of the perceived importance of a hemisphere-wide free trade zone.
The Latin American leaders were making many of the same arguments that Mexico had used to secure NAFTA. There was no denying the imbalance in the standards of living in the two halves of the hemisphere. By all counts, Mexico, Argentina, Chile, Venezuela and other Latin American countries should have been prospering, but they had lagged behind the north for centuries. The rest of the region was even further behind, and remains so today. World Bank figures show GDP per capita in the north is eight times higher than in the south ($81,276 against $10,738). With just a third of the hemisphere’s population, the United States drives three quarters of the region’s economic activity. In almost every indicator of quality of life, from the percentage of the population with access to safely managed sanitation services to the rate of homicide, the gap between North and South is just as wide. How did this happen?
With the benefit of several centuries of hindsight and the opportunity to have lived in both halves of the hemisphere, the root causes seem clear to me. It was not being endowed with abundant resources or condemned by natural disasters that made the difference. Rather, it was a preordained confluence of blood and faith, compounded by character and luck, that drove development at staggeringly different paces, resulting in the bifurcated state of the hemisphere we live with today.
The divergent paths were evident from the earliest days of the United States, which this year celebrates the 250th anniversary of its founding with its singularly bold Declaration of Independence. Alexis de Tocqueville put great stock in what he called ‘habits of the heart’ – the civic engagement and community decision-making that he believed had shaped the fledgling American democracy. He found scant evidence of such habits in Spain’s New World possessions, which even then he feared ‘cannot maintain a democracy’.
Thomas Jefferson’s scathing view of Spain’s role in the New World was widely shared in the young Republic. ‘I fear the degrading ignorance into which their priests and kings have sunk them,’ Jefferson wrote in 1811, just as Mexico and the other Latin American nations were beginning their struggles for independence. Jefferson did not hold out much hope that casting off the crown would cure their supposed shortcomings. ‘Should their new rulers honestly lay their shoulders to remove the great obstacles of ignorance, and press the remedies of education and information, they will still be in jeopardy until another generation comes into place, and what may happen in the interval cannot be predicted.’
Even the great Latin American statesman, Simón Bolívar, acknowledged fundamental defects that would hold back the South American nations he helped liberate. In 1830, as he was dying of tuberculosis, he looked back over his struggles and concluded that the Latin America he knew was ‘ungovernable’. Weary of the backstabbing and lack of morality that challenged what he had achieved, he warned that the nations of New Spain would inevitably fall into the hands of mobs, tyrants, and criminals. ‘If it were possible for any part of the world to revert to primitive chaos’, he wrote, ‘it would be America in her final hour.’
By the 1850s, the prominent American historian Francis Parkman was directing towards Spain and Portugal many of the sharpest barbs he’d already flung at France, criticising their absolutism, their rejection of the Protestant Reformation, and their short-sighted resource-scavenging mercantilism, all of which combined to recreate old-world feudalism in the New World, a far inferior approach, in Parkman’s view, to the enlightened reality and pursuit of liberty that had taken hold in New England, and subsequently shaped the American experiment.
For Parkman and others, Spain had treated the New World as merely an extension of its 800-year military-religious Reconquista of the Iberian peninsula, which had concluded just months before Columbus sailed west in 1492. From the outset, military conquest and religious conversion were Spain’s strategic goals everywhere the crown ruled, always hand in hand with the Catholic Church. Within 100 years of Columbus’ landing, Spain and Portugal had conquered the entirety of Central and South America. By then, the settlement of North America was just beginning, and it would take almost three centuries for the continent to be conquered.
The Spanish Crown ensured that New Spain would remain faithful to the Catholic Church, granting it many favours and limiting colonisation to the Catholic faithful. When land disputes arose between Spain and Portugal, both rigidly Catholic nations took their disputes to the Pope. The resulting Treaty of Tordesillas in 1494 divided the New World between them, the claims of other European discoverers notwithstanding.
Spain’s first permanent settlement in the hemisphere, Santo Domingo in what is now the Dominican Republic, dates from 1496, a full century before the first permanent English settlement in Jamestown, Virginia, in 1607. Spain’s head start did not provide any permanent advantage; in many ways, being there so early became a huge drawback. Given the unprecedented opportunity to reimagine civilisation, Spain recreated Europe’s aristocracy, large estates, and the subjugation of lower castes. The Enlightenment’s advanced ideas of self-determination and individual responsibility, so critical to the North American colonies, were largely absent. On the other hand, starting more than a century later, settlers in North America took maximum advantage of contemporary ideas of liberty, equality and human rights, while also benefiting from preoccupied colonial masters, who left them largely to their own devices as long as they paid their taxes.
‘North American society was modern from the start, whereas Latin America continued to be plagued by feudalism,’ wrote the late Howard J. Wiarda, the University of Georgia’s noted Latin American expert. ‘These differences also explain why, from the start, the United States was destined to forge ahead while Latin America lagged behind.’
In his insightful book, Forgotten Continent, Michael Reid notes that Latin countries greatly admired the constitution of the young United States as they fought for their own independence, a movement that was triggered not so much by popular sentiment as by the Napoleonic Wars in Europe. When Napoleon installed his brother Joseph on the Spanish throne, the colonies across the ocean refused to vow allegiance to the usurper. In just 17 years, all but Cuba and Puerto Rico were on their own. The US Constitution became the model on which many based their own, incorporating bicameral legislatures, independent courts and term limits.
But, lacking any experience of self-rule during their three centuries as colonies, and without a leader as selfless as George Washington willing to voluntarily transfer power to a successor, the newly emerged nations stumbled into independence woefully unprepared for what was to come. Some, like Mexico (formally the United Mexican States), went directly from colony to dictatorship under Emperor Agustín de Iturbide, an officer in the Royal Spanish Army who had fought for the king against insurgents but then changed sides to lead the rebels to victory and proclaim himself emperor. When conditions in Mexico deteriorated, Iturbide abdicated the throne and went into exile. When conservative leaders convinced him to return to Mexico and retake power, he was arrested, tried and executed, leaving a legacy of instability that haunted Mexico well into the 20th century. Even then, it emerged from the chaos of the 1910 Revolution only when leaders concocted the single-party system of domination that Mario Vargas Llosa considered ‘the perfect dictatorship’, which lasted until 2000.
Other Latin countries followed a similarly self-defeating pattern: independence followed by authoritarianism, chaos and realignment. (Bolivia experienced almost 200 coups after independence in 1825). The revolving door of leaders and movements hindered economic and social progress for many decades. Cut off from the Spanish market that had been their sole export outlet, and without an internal market large enough to sustain development, the Latin American economies foundered.
How different it was for the young American Republic, which quickly consolidated its gains after independence. Its new constitution prohibited internal tariffs, creating a home market among the states that was large enough to foster local industries, while trading with France and other allies added economic vigour. A legal system that was growing in strength and backed by an independent judiciary assured private property rights and went a long way towards avoiding the legal uncertainty that plagued Latin America. The United States continued to grow after independence, marching steadily across the continent, adding territory and commerce, with such rapid expansion that it tested the young nation’s resolve. Whether the new western territories would become slave states heightened the tensions that led to the outbreak of the brutal Civil War of 1861, and a major realignment of the young nation’s character.
Free enterprise and the spirit of the western frontier combined to give the United States an entrepreneurial spark that turbocharged the industrial revolution in North America. Immigration in the late 19th and early 20thcenturies brought a flood of cheap immigrant labour that helped consolidate gains, while Latin America continued to struggle, both politically and economically. The region did not start to make significant industrial and economic advances until the 1930s, when democracy had barely a foothold in the region.
Geography, too, played a role in how the hemisphere developed. North America was blessed with abundant natural resources, a vast network of waterways connecting vital points, and a hospitable topography, with mountain ranges inland from habitable coasts and a tremendous hinterland of fertile plains. Its land contained mountains of coal and, it later turned out, oil in abundance.
Latin America also had bountiful resources, including silver and gold that buoyed the empire for centuries until they ran out. There were other natural riches too, but they were spread out over many different countries so that no one nation had all the raw supplies it needed to prosper. Their economies relied on volatile commodity exports instead of manufacturing, which left them open to unpredictable market swings.
Majestic mountains along South America’s coasts and the impenetrable inland rainforests resulted in a pattern of disconnected settlements throughout the continent. Travel among habitable areas was difficult, and the river systems, though expansive, did not link up the population centres, resulting in the isolated patrias chicas that emerged. Despite the efforts of Bolívar and others to consolidate territory, their idealistic sovereign creations – Gran Colombia, Rio de la Plata and the Central American Confederation – ended as nothing more than footnotes of history.
Brazil is an exception. With fewer New World possessions than Spain, and a smaller home population, Portugal administered its conquered land in the New World with a centralised colonial structure that governed the entirety of Brazil. After Napoleon invaded Portugal in 1807, the entire Portuguese royal family sought exile Portugal’s largest and richest overseas possession. When the king was restored to his throne, he returned to Europe, but his son, Dom Pedro, remained in Brazil and later led the struggle for independence. The Empire of Brazil lasted until 1889, when it became a presidential republic.
Endless revolutions, civil wars and coups have been a constant drag on development in Latin America. By contrast, the US Constitution, written in 1787 and the law of the land since 1789, has been amended only 27 times, and is now the shortest and oldest codified constitution in the world.
By the time President Bill Clinton invited the 33 other nations of the Americas (all except Cuba) to the first Summit of the Americas in Miami in December 1994, all but two of them were democracies, and Mexico would join the democratic club in just a few years. It was in Miami that the notion of building on NAFTA to create a free trade zone from Alaska to Tierra del Fuego was formally proposed.
But months before the Summit, indigenous rebels in the southern Mexican state of Chiapas had marched out of the jungle on 1 January, the very first day that NAFTA took effect, and declared war on the Mexican government. Mexico City had promised that NAFTA would propel the country into the First World, the exclusive zone occupied by the United States, Canada and Western Europe. However, for the Zapatista rebels, NAFTA sounded the death knell for indigenous people like them.
Although Latin America remains one of the most unequal regions in the world (the Council on Foreign Relations estimates that the top 10 per cent there have 12 times more wealth than the bottom 10 per cent), the region’s steady drift towards democracy over the last 50 years has substantially improved living conditions for many. Mexico is now one of the United States’ largest trading partners, with a substantial middle class and an emergent civil society. Brazil has a legitimate claim to being South America’s biggest and most robust economy. A few countries, in particular Venezuela, made real economic progress in the last years of the previous century, only to see much of the progress wiped out by gross incompetence, greed and criminality. As the New York Times reported recently, over the last decade, Maduro and his cronies pocketed half of Venezuela’s oil revenues. The wreckage of Cuba, one of Latin America’s most prosperous countries before Castro seized power in 1959, stands as another distressing example of Latin America’s unwillingness to break from the old Iberian model of caudillismo, the absolute rule by one man.
The political picture in the South remains unpredictable. It’s now necessary to distinguish between electoral democracies that are essentially dictatorships, such as Nicaragua and Venezuela, and democracies that truly support diversity of opinion and an orderly transfer of power. Within the democracies, the ideological slant has shifted right, which helps explain why there was so little protest anywhere in Latin America after a Delta Force strike team boldly slipped into the heart of Caracas in early January and secreted away Maduro and his wife to stand trial in New York on drug trafficking charges. It was a stunning example of the range and power of the US military, as well as an unsettling reminder of Latin America’s continued subservience and weakness.
With its aggression towards Venezuela, Cuba and others, the Trump administration seems to have adopted the same view of Latin America as Jefferson and Bolívar, treating the region as a stepchild needing constant supervision. It has twisted the Monroe Doctrine from a post-independence warning to would-be European re-colonisers, to a licence to intervene whenever its interests are threatened. And there are worrisome signs that Washington, under President Trump, is starting to resemble some of the worst traits of the Latin caudillos, resorting to brute force, trampling precedent and rigging the justice and legal systems to its own advantage.
Latin America has long complained that it can never win with Washington. Either the United States ignores the region while it fixates on Russia, China or the Middle East. Or, it acts like it has the absolute right to police, punish, and realign the hemisphere to its own liking.
A Free Trade Area of the Americas could have changed that, paving the way for resurgent Latin American prosperity and undoing some of the worst parts of the region’s character that have held it back for so long. But instead of the gigantic free-trade zone stretching from pole to pole that the countries had envisioned, the United States is raising tariffs and imposing trade obstacles that will do little to improve Latin America’s standing.
The adverse realities of Latin America’s present that derive from its past cannot be erased. But the region’s future will be determined by how well it can shake the ancestral strains that remain and embrace the proven success of its neighbours to the north, acknowledging their excesses and avoiding their pitfalls. It is a process not of competition but of maturation and growth, an historic evolution that is already underway, and one that deserves to be nourished by both North and South.
Bankwatch 