Commodity exports were the mainstays of peripheral economies in the 19th century. Agricultural products were among these. Initially, these were inputs into industrial processes, often in the textile industry: think of Indian dyes, American cotton, and New Zealand wool. Near the end of the 19th century, consumer demand enlarged markets for other ‘soft’ agricultural…
This is the second in a two-part post. The first covered the origins of Chile’s Caja de Crédito Hipotecario, a state-owned mortgage bank that was one of a handful of financial institutions originating in a wave of bank formation in 1850s and 1860s Chile. This post covers the recovery from a mortgage crisis in…
Rising property values can entice mortgage lenders and the availability of credit for real estate investments can fuel further property appreciation. This has often caused problems. However, the absence of mortgage financing is at least equally problematic as it deprives property owners, or prospective owners, of the chance to undertake improvements to property and this…
Some currencies are essentially abandoned when they become increasingly worthless due to hyperinflation. The public simply transitions to using foreign currencies instead. However, it’s also possible for a government to officially dispense with its own money and adopt that of another country as its official legal tender. Ecuador experienced a major economic crisis in…
State borrowing allows governments to pursue undertakings they would otherwise find impossible. Whether for large infrastructure projects or social reforms, public borrowing can create greater prosperity or expensive mistakes. When the latter are the result and the borrowing was done domestically, the public is hurt doubly, both as borrower and as investor. In the case…
In the 1970s, many countries were hobbled by the energy crises of 1973-74 and 1979. Of course, some made out very well. Oil producing countries spurred along by ‘resource nationalism’, particularly those that did not themselves slash production to keep prices elevated, saw an oil windfall transform their economies. However, oil is a volatile basis…
In the early 19th century, several new countries were born in Latin America. Many of these began to borrow in their own name from the capital markets, especially in London, and many found themselves bankrupt. Brazil was among the first group but not among the second, avoiding a fate that plagued much of the continent…
Among the most dramatic and controversial economic transformations pursued in any country was that launched in Chile after the 1973 coup that brought General Augusto Pinochet to power. The civilian administrators he entrusted with the nation’s economy went about turning it into a neoliberal experiment. Their reforms included a restructuring of the country’s dated pension…
