The Second Conquest of Latin America: Coffee, Henequen, and Oil During the Export Boom, 1850-1930 (review)

A few years ago, a paper by Jeffrey Sachs and Andrew Warner, as yet unpublished, created a minor stir by arguing that abundant resources could handicap a country’s economic development more than they helped. There were many explanations for this paradox, but two in particular seemed promising. The first held that a resource-rich country could finance inefficient economic policies by selling its resources in the international market. The second, the theory of endogenous tariffs, basically argued that resource-rich countries could never industrialize without tariff protection because their comparative advantage in raw materials was so strong. A country like Japan, the natural endowments of which were modest, would be forced to invest in its people to compete in the international market. Human capital formation fostered development, not barrels of oil or bales of cotton.

Sachs and Warner’s thesis haunts this thoughtful collection of essays. Topik and Wells consider a related, equally sensible question. Does it matter which commodity a country exports? Is there any advantage to producing, say, silver as opposed to guano? Since resources are rarely homogeneous, do some countries end up better positioned for economic growth than others? Topik and Wells pose the question for Latin America between 1850 and 1930, but this is the kind of question that could be applied fruitfully to other areas of the world.

Topik’s essay on coffee is an excellent example of how varied the circumstances that attended coffee production were. For example, before 1888, Brazilian coffee planters used slave labor. After emancipation, they turned to peasant production and to wage labor. Coffee was grown on large plantations in Brazil, but it prospered in Central America on small and middle-sized farms. As Topik succinctly concludes, “The history of coffee is a history of diversity and a history of possibility” (74). Wells makes a similar point about manila, henequen, and other “hard” fibers produced in Mexico and the Philippines. In Yucatan, henequen triumphantly swept all before it. In the Philippines, by contrast, manila production “merely acclimated itself, with only minimal adjustments, to prevailing land and labor patterns” (104). For crude oil, Jonathan Brown and Peter Linder argue that “the oil industry helped alter the social and political landscape throughout the hemisphere” (126). Yet, foreign oil companies operating in Latin America did not simply have things their own way. In that regard, the example of Mexico, where the industry was nationalized in 1938 over the protests of foreign owners, is most instructive. A final essay by Mira Wilkins rightfully argues that the large increase in commodity exports from Latin America after 1850 was a response to large changes in international demand, not the consequence of an ideological shift “from ‘statist colonial regimes’ to ‘liberal export regimes’” (190).

The only drawback with this volume is its steadfast unwillingness to look at economic history as just that—economic history. Doing so could only help to bring order to a discussion that frequently meanders in several directions at once. Thinking about the export booms in terms of “Dutch disease”—the concentration of resources in the export sector that occurs as a boom gets underway—would have clearly helped. Oddly enough, the idea is never even mentioned, let alone applied. Furthermore, can you really talk about a commodity boom without a systematic discussion of the terms of trade? Hardly. The resulting book is agreeable as comparative history, but economic historians should be prepared to bring their own supply and demand curves to sort things out.