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What’s the Matter with South America?

Though it is unclear which caused which, there is no doubt that South America's embrace of traditional values and corporatism has prevented it from reaching its economic potential. Whether the region can achieve prosperity in the future will depend on its willingness to stop worrying and learn to love free enterprise.

NEW YORK – South America continues to lag behind most of the world in social and economic performance. At bottom, South America’s problems reflect widespread governance failures, owing to the institutions that emerged in the region and the values that underpin them.

The presence of some powerful values inimical to individual success and innovative pursuits has given rise to corporatism, a system that prevents political and economic competition in the name of social harmony and national unity. A result is an economy in which the business sector is enmeshed with the public sector and tied down by state restrictions.

Yet this corporatism is not the whole of the problem. In the near-absence of the modernist values that sparked massive, grassroots innovation in Britain, North America, Germany, France, and Sweden from the mid-nineteenth into the twentieth century, South Americans have remained wedded to a loosely defined traditionalism. A result is a continent in which only a minority of people are oriented toward careers of creating or venturing, and thus flourishing.