External Debt, Extractivism and Responses

Abstract

Once again in their history, the countries of Latin America and the Caribbean (LAC) are seriously indebted. In the last 42 years, between 1980 and 2022, the Latin American and Caribbean external debt multiplied by 11 times. In this period, the debt per inhabitant went from US$617 to US$3,675.

The objectives of the article are to analyze the new economic conditions of Latin American debt and determine the biophysical implications, given the close link between debt and nature. A quantitative methodology is combined that relates economic flows with material flows. Possible local and international responses to deal with indebtedness are also examined.

The main conclusions are that the region faces financial dependency, poor international insertion in the international division of labor and nature, and internal economic decapitalization. To pay the debt, economies must grow, but they cannot grow if they are in debt (this vicious circle tends to amputate the arms of "development" and condemn our countries to perpetual dependency). Between 1980 and 2022, the external debt increased 5.8% per year and real GDP (US$ 2015) 2.3% per year.

Likewise, the greater the financial indebtedness, the greater the extraction of resources in the long term. Between 1980 and 2019, the amount of extracted materials (in physical terms) in LAC grew 2.7 times (from 4.1 to 10.9 billion MT) and per person (from 11.3 MT to 16.9 TM). This extraction occurred in sites of high cultural and environmental value, such as the Amazon, which caused socio-environmental conflicts.