The Economy of South America.....

The economy of South America comprises approximately 410 million people living in twelve nations and three territories. It encompasses 6 percent of the world's population.....

From the 1930s to 1980s, countries of South America used Import Substitution, an economic policy which replaces foreign businesses as well as imports with domestic production. This was a policy made to increase domestic manufacturing. Furthermore, national spending on arms soared during periods of military rule. Increasingly South American countries began to borrow from foreign private banks and international lending institutions, such as the World Bank and the Inter-American Development Bank, to fund existing programs while also trying to expand their economic productivity through investments. However, this policy created a debt crisis in South America.

The continent has fallen farther behind the Western countries over the past two centuries. This can be explained by South America's high concentration on primary commodities as well as the state of the educational system and institutional structure, some of which are still related to its colonial past, others to recent political developments.

From the 1990s onward countries in South America switched over to the system of Free-Market economy. Now, major economic activities include agriculture, industry, forestry, and mining.

In 2016, four countries, which include Brazil, Ecuador, Argentina and República Bolivariana de Venezuela experienced decline in output. Other countries in the region were observing slowdown in growth rates. Brazil saw this decline in output due to increasing unemployment level, worsening financial conditions and political issues, which, in turn, lead to decrease in private domestic consumption and investment. Argentina also experienced recession in private consumption and investment, however it was because of removal of public service subsidies due to short-term rise in inflation. In contrast, Peru differed from other countries in the region - demonstrating increase in growth rates thanks to copper production.

In 2017, the economy has started to recover for the first time since 2014. The main contributors to economic growth is private consumption. Increased retail trade and industrial production in Brazil has led to expansion of its economy by 1% in 2017. Higher public investments and private consumption have resulted in growth of economy of Argentina compared to its recession in 2016.

In 2017, inflation rates were observed to be in a downward trend in most of the major economies. The reasons are prior exchange rate appreciations and food price deflation. Some countries are even expected to lower their target bands in 2019.