Global Business in Latin America - Research Paper Example

Regardless of significant differences in Latin America, most of the LACs traditionally displayed huge inequalities in income distribution. In fact, today, the inequity between families, people or members of different social classes is not only present in countries such as Colombia and Brazil, but also in Mexico, Argentina, and Chile. Thus, the concept of inequity in income distribution is not new but has been in existence for quite a long period of time more so among the LACs.Due to the global crisis of the 1930’s as well as the reduction of transnational trade, America was propelled towards the creation of an internal dynamic based on import as well as firm control of foreign exchange.

After the WW II, large countries focused on spurring industrialization thus leading to a high level of income concentration. Nonetheless, due to a large supply of labor and the structural heterogeneity between wage and goods in Industrial and Agricultural sectors, there was an ultimate distribution of this income. Therefore, these were the factors which affected the income of individuals in the LACs. However, the introduction of the restraint affected the economic growth. This is because BOP led to the rise in interest rates as well as exchange rates leading to inflation, thus consequently exerting a depressing effect on real wages in LACs.

The BOP constraint that recurrently complemented the process of industrialization in LACs was thus the key economic factor that led to the high surplus of labor and structural heterogeneity.