Uploaded February 2026 | Updated September 2026, 1 week ago
Latin America’s stagnation is a function of the weakness of its institutions.
fee.org/articles/latin-americas-lag
Sustainable growth depends on the protection of property rights, limits on power, and open competition. When extractive institutions prevail, power becomes concentrated and the economy rewards those who are more skilled at political maneuvering rather than productive activity.
Venezuela illustrates how institutional destruction precedes productive collapse: the politicization of PDVSA, authoritarianism, and international isolation crippled its main industry. In Colombia, the coexistence of the state with criminal structures and populist decisions weakens legal certainty and investment. Brazil faces the risk of excessive judicialization that erodes institutional balances. Argentina is attempting to reverse decades of distortions, although obstacles persist.
The region suffers less from a lack of resources than from an excess of extractive institutions. Without deep reforms that strengthen the rule of law, development will remain fragile and temporary.
Latin America’s stagnation is a function of the weakness of its institutions.
fee.org/articles/latin-americas-lag
Sustainable growth depends on the protection of property rights, limits on power, and open competition. When extractive institutions prevail, power becomes concentrated and the economy rewards those who are more skilled at political maneuvering rather than productive activity.
Venezuela illustrates how institutional destruction precedes productive collapse: the politicization of PDVSA, authoritarianism, and international isolation crippled its main industry. In Colombia, the coexistence of the state with criminal structures and populist decisions weakens legal certainty and investment. Brazil faces the risk of excessive judicialization that erodes institutional balances. Argentina is attempting to reverse decades of distortions, although obstacles persist.
The region suffers less from a lack of resources than from an excess of extractive institutions. Without deep reforms that strengthen the rule of law, development will remain fragile and temporary.
