Latin American countries are physically located in the western hemisphere. However, the term ‘western countries’ can be used in a variety of context. ‘Western nation’ has been historically used to denote the countries that were colonized by European nations. During the cold war period terms ‘East’ and ‘West’ were used to denote communist and capitalist countries, respectively. The term has also been used to denote development status of any given country, with western nation denoting the developed countries. In this context the Latin American countries, have often been viewed as a part of the third world countries which are characterized by underdevelopment (Cardoso and Faletto). In the economic context where the term ‘western nations’ describes the developed countries, Latin American countries do not fall under the western nations. This is because the Latin American nations in this context are underdeveloped and have the characteristics of the third world countries.
These characteristics include high levels of unemployment, less technological development, dependency on the developed economies and under industrialization. The classification of a given region as western can, therefore, be argued to depending on the context the reference is used to denote. As such, ‘western nations’ can be used to describe a region’s geographical location, ideological leanings or historical references. According the geographical references Latin American countries fall under the western hemisphere. They can, therefore, be referred to as western countries. In historical context the Latin American countries were colonized by the European countries, meaning that they can be said to be western countries. In the economic context, where the term ‘western nation’ is used to denote the developed countries, Latin America is not a part of the west. In this context Latin American countries can be classified as developing nations since most of their economies are characterized by underdevelopment (Freire).
The dependency theory of development postulates that developing economies are largely influenced by developed economies. The theory that was popularized in the 1950s and 1960s was used to explain the predicament of developing economies. According to the dependency theory, developing economies depend on western nations for investment capital needs, exposing such nations to the rich nation’s influences. The populations in underdeveloped countries are mainly characterized by low income level, low life expectancy, inadequate housing, high illiteracy level and poor health. These conditions are dominant in most countries of the Latin America with income inequality preventing social mobility (Cardoso and Faletto). The countries have also heavily relied on investment capital from the developed countries. In addition the 1970s, 1980s and early 1990s saw these countries borrow heavily from the World Bank and the International Monetary Fund.
The borrowed funds exposed most of the third world countries to the influences of the Breton Wood Institutions and the policies of the developed countries. One of the Latin American countries, Brazil, triggered the world debt crises in the early 1990s by declaring its inability to pay its debts. Such occurrences are possible where the nation’s development capital is mostly borrowed from the developed nations or the Breton Wood Institutions. Unfortunately, borrowing today is among the factors that have made the underdeveloped countries remain poor. Mainly this is because the borrowed funds have to be repaid and thus they expose a country to the western influence. Whereby, development policies are mainly dictated by rich countries (Cardoso and Faletto). The policies dictated by the developed countries as solutions to underdevelopment, have not always worked. This can be exemplified by the structural adjustment programmes of the 1980s or the SAPs as they are popularly known. The structural adjustment programmes were a total failure since they mainly depended on liberalizing of the underdeveloped economies. Liberalization exposed the underdeveloped economies to competition against efficient economies. This meant that products from underdeveloped countries could not compete against those from developed economies.