The Persistence of Commodity-driven Growth in Latin America

Latin America’s developmental trajectory is shaped by its states’ unsuccessful attempts to switch away from a Growth Model (GM) based upon the extraction and exportation of commodities to growth models based on manufacturing and services. Contra research that emphasizes the relevance of external constraints, I argue that the persistence of commodity-driven growth is explained by an endogenous distributional dilemma. While governments have clear incentives to promote the interests of the rural sector due to its centrality in commodity-led growth, doing so affects their capacity to promote the urban sector, and thereby successfully switch GMs. This dilemma can be traced in three interrelated areas— macroeconomic policies, fiscal policies, and the domestic balance of power—under New Left governments during the recent commodity boom.