Economy of South America


Argentina is a presidential democracy marked by the legacy of Juan Domingo Perón, who ruled the country in the 1940’s and 50’s. The Peronist Party has dominated politics with the exception of periods of military rule. Deep economic crises have replaced each other in recent decades and presidents from both the left and the right have failed to find a path to stability.

The trade union movement is free and has periodically had a great political influence but has at the same time been criticized for being too close to Peronism.


Country Facts

State condition: Republic

Surface: 2,780,000 km2

Capital: Buenos Aires

Language: Spanish

Labor market and economy:

Argentina’s economy was first built around livestock farming, agriculture and natural resources such as oil, natural gas, copper, gold and uranium and with these raw materials as a basis, a domestic industrialization took place that created a strong national economy. Production was protected by tariffs and the state had a large ownership and influence over many companies. The protected economy led to inflation and other growing economic problems during the 1960’s. During the military dictatorship in 1976-1983, up to 30,000 people were murdered at the same time as the economy collapsed, creating deep wounds that Argentina is still struggling with.

After the junta, several attempts were made to reform the economy, but around the turn of the millennium, the economy collapsed again. From 2003, a recovery of the economy began thanks to a devaluation of the currency and high world market prices for agricultural products and low international interest rates. But the financial problems continued and in 2014 Argentina was forced to suspend payments on its international loans. After the crisis, attempts were made to stimulate the economy through reduced government spending to create a long-term sustainable economy, but the economic downturn has continued with high inflation and growing deficits.

The sharp fluctuations in the economy have caused the informal sector to grow and today it is estimated to comprise about one third of the labor force. The services sector employs a majority in the formal sector, a quarter is in industry, while agriculture accounts for about 7 percent of those employed.


Bolivia is characterized by the country being dominated by indigenous peoples, who make up about two thirds of the population. After centuries of marginalization of the majority, in 2006 Evo Morales, who belongs to the Aymara people, was elected president. The country received a new constitution in 2009 defining Bolivia as a multi-national state and the state gained control of the country’s most important natural resources. A decade of good growth and social reform has reduced poverty in the country, but society is still deeply divided. Following Morale’s resignation at the end of 2019, polarization has increased.


Country Facts

State condition: Republic

Surface: 1,098,581 km

Capital: Sucre, formal capital. La Paz administrative capital

Language: Spanish, Quechua and Aymara

Labor market and economy:

In the 20th century, huge tin mines provided work for thousands of people and Bolivia was the world’s second largest producer of tin. In 1985, the world tin market collapsed, many mines closed and the economy fell into free fall.

In the 1990’s, huge natural gas deposits were discovered and the gas quickly became the country’s new, large export income. When Evo was elected president, the gas industry was nationalized, and thanks to high gas prices, government revenues increased markedly. In recent years, the mining industry has also recovered and overall the economy has grown and GDP / capita has doubled since 2006. However, Bolivia remains one of the poorest countries in the region. Formal unemployment is low, but a majority of the population works in the informal sector or are self-sufficient small farmers.


According to COUNTRYAAH, Brazil is Latin America’s largest country both geographically and economically as well as in terms of population. The country is a democracy with free trade unions and in 2002 the chairman of the Labor Party and the former trade union leader Lula da Silva were elected president. The party then held power for 14 years, a period that coincided with strong growth which enabled comprehensive social reforms and poverty reduction. But Lula’s successor was ousted and he himself was sentenced to prison for corruption and Brazil has been ruled since 2019 by Conservative President Jair Bolsonaro.


Country Facts

State condition: Republic

Surface: 8 547 400 km2

Capital: Brasilia

Language: Portuguese

Labor market and economy:

With enormous natural resources and an expanded industry, Brazil is well placed to be a strong economy. For a decade after the turn of the millennium, the country was also one of the world’s fastest growing economies, thanks in large part to high commodity prices. Brazil, along with Russia, India and China, was named the emerging economies of the future in the BRIC quartet. The good growth enabled extensive social programs aimed at the poorest part of the population. Despite declining poverty, large gaps remain in society, which is one of the most unequal in the world.

Brazil built up a strong domestic industry in the 1960’s and also managed to attract large international investments and multinational companies, including several of the large Swedish companies. The region around the city of Sao Paulo became the center of industry and was for a period called Sweden’s largest industrial city. Today, industry accounts for about 20 percent of GDP and employs about 10 percent of the workforce. In the countryside, huge plantations still produce that produce soybeans, sugar, coffee, oranges, cotton and large goods for meat production. About 15 percent work in agriculture. Most of the agricultural production is exported and as the oil and gas sector has also grown strongly, Brazil has become very dependent on international raw material prices.

However, growth has slowed in recent years due to reduced demand and lower prices for agricultural products, oil and minerals. Reduced revenues led to an increase in the budget deficit, which in 2015 reached over 10 percent of GDP. The economic crisis was also exacerbated by corruption deals involving the state oil company Petrobras, which led to the removal of President Dilma Rousseff in 2016, which meant the end of the Labor Party’s hold on power. Instead, conservative Jair Bolsonaro was elected president of a neoliberal program.


Chile is a presidential democracy that to some extent is still marked by the 16-year-long brutal military dictatorship. Since the return of democracy in 1989, society has developed in a positive direction and Chile is the most economically successful country in Latin America, which has led to a reduction in poverty, but the high income disparities persist. The lack of a better distribution of wealth led to massive protests at the end of 2019 that forced the government to promise reforms and a majority of the country’s parties agreed to rewrite the constitution and remove the last remnants of the military dictatorship. The trade union movement is free but was hit hard during the military dictatorship when trade unions were banned and persecuted.


Country Facts

State condition: Republic

Surface: 757 000 km2

Capital: Santiago

Language: Spanish

Labor market and economy:

The neoliberal economic policy introduced during the military dictatorship remains the basis of the policy pursued, even if adjustments have been made since the return of democracy. Chile has had stable economic growth for many years based on both exports and large international investments, which has meant that the country has the region’s highest GDP / capita. Poverty has steadily decreased while income disparities and social disparities persist, which was one of the reasons for the widespread protests and strikes that took place at the end of 2019 and which forced the President to enter into a dialogue on reforms. The country’s largest parties also agreed to rewrite the constitution in order to remove the last remnants written during the military dictatorship.

The economy has traditionally been highly dependent on copper exports, Chile is estimated to have about a quarter of the world’s copper resources and copper revenues account for a third of the state’s revenues. Although dependence has decreased from over 85 percent in the 1970’s to around 35 percent today of the total export value, Chile is still very sensitive to changes in world market prices. To reduce dependence, Chile has invested heavily in expanding the agricultural sector with orchards and vegetables, and fishing and forestry have also grown in recent years.

Industry employs about a third of the workforce, while a majority work in the service sector.
The informal sector, the largest in agriculture, is estimated to employ about 25 percent. Although women are relatively well educated, their share of the labor force is among the lowest in Latin America, largely due to the strong traditional Catholic culture.