Joyful, violent and misunderstood. A look at Latin America, beyond magical realism

Buenos Aires. “When you look at the data, you discover a region of contrasts,” says Daniel Schteingart, an Argentine sociologist and director of the Economic Development department at the Fundar Foundation. In Italy, a genre of journalism is flourishing that reduces Latin America to the Amazon, revolutions and Netflix series on drug trafficking. Schteingart offers a different perspective, starting with the figures. In this interview with Il Foglio, he discusses the election in Brazil, Milei’s track record and what the region can teach the world about economic development.

Lula managed the economy more than respectably: growth, falling unemployment, rising real incomes, and poverty on the decline. But during his last term in office, Brazil did not experience any boom: it grew by less than 3 per cent per year on average. With growth rates of 4–5 per cent, as in the first cycle of the PT governments, Lula would go into the election in a much stronger position; with a stagnant economy, he would be struggling. Research by CEDLAS shows that in the 2010s, Latin Americans’ incomes continued to rise, whilst discontent grew, partly due to the sharp slowdown compared with the previous decade. People were making progress, but at a slower pace. This dynamic helps explain why incumbents in Latin America struggle to retain power. There are exceptions: in Mexico, López Obrador has cemented a lasting coalition thanks to substantial increases in the minimum wage and a reduction in poverty; in El Salvador, Bukele has won overwhelming support by slashing the homicide rate, albeit at a high cost to freedoms and democratic institutions. Then there are the social transformations: compared with twenty years ago, Brazil is better educated, more urbanised and more service-oriented. Evangelical churches offer community networks, comfort and a narrative of personal redemption that resonates with the aspirations of vast sections of the population, whilst the rise of self-employment is reshaping the demands placed on politics. Progressivism must be able to represent these new middle classes, but it also faces a more fundamental problem: it must once again offer a credible prospect of sustainable economic progress. Improving certain social indicators is valuable, but after so many years of sluggish growth, it is no longer enough to inspire people.

We Argentines can spend an entire dinner complaining that nothing works and, shortly afterwards, proclaim that we have the most delicious asado and the best people on the planet. The book stems from a sense of unease with both of these narratives. The problems are serious: over the last fifty years, we have been in recession for almost half the time, we have lived with chronic inflation, and for over a decade we have been unable to achieve sustained growth. Yet, in absolute terms, the country has made enormous progress: we live longer, we are better educated, we live in better homes, and we enjoy more civil rights. And we retain a vibrant social life: according to the World Happiness Report, Argentina records levels of happiness almost identical to those of Italy, which is far more developed. Both statements are true, but each political camp cherry-picks the half that suits it. The libertarian right emphasises decline, and if everything lies in ruins, blowing up the state seems sensible. Part of Peronism and progressivism, on the other hand, has downplayed very real problems, such as macroeconomic instability or the inefficiency of the state. The Italian reader will recognise something here: two societies that have long been struggling and experiencing relative decline, with a certain nostalgia for times when progress seemed within reach. Except that we have added to this an unparalleled level of macroeconomic instability. The risk of a diagnosis that everything is a write-off is that we end up demolishing what we still know how to do well.

The main achievement has been to bring inflation under control and put public finances back on track. Milei inherited an annual inflation rate of over 200 per cent; today it stands at around 30 per cent – still high – and it remains to be seen whether stability will take hold. Argentina has already seen several promising stabilisation plans foundered in new crises, and this programme relies heavily on support from the IMF and the United States. In the book, I argue that the country must resolve three key issues: macroeconomic stability, a more effective state, and a more sophisticated productive structure. Progress has been made on the first; on the other two, there has been a setback. The government is banking on the Vaca Muerta hydrocarbon fields and the mining sector – sectors with extraordinary potential – but has no interest whatsoever in fostering industry and technology around them. As for the state, we have spent money like the Europeans whilst achieving Latin American results; therefore, far-reaching reform is needed, but Milei seems more interested in downsizing it than in making it function properly. Cuts to science, universities and public bodies are eroding capabilities built up over decades. Changing a regulation or a budget is simple; reviving a failed enterprise, rebuilding a scientific team or bringing back researchers who have emigrated is far less so. Milei has said that the state “is worse than the mafia” and that he is “the mole destroying the state from within”. It is hard to imagine sustainable development without a capable state, and I see not a single sign of state-building, unlike in other liberal experiments of the past.

The risk is very real, but Argentina is far more diversified than Peru: it boasts automotive, pharmaceutical, biotechnology, nuclear and satellite industries. Around 25 per cent of exports of goods and services consist of medium- and high-tech manufactured goods and knowledge-intensive services. The problem lies in the trajectory: between 1974 and 2024, per capita industrial output contracted by around 28 per cent, whilst in advanced economies industry has lost ground in terms of employment but has continued to expand. Now, hasty trade liberalisation, lacking a restructuring strategy, is decimating businesses and skills. In 2025, the economy grew by 4.4 per cent, yet businesses and formal employment have disappeared: this has not happened for at least thirty years. Oil, gas and mining will see a surge, and this is good news, because Argentina is in desperate need of foreign currency. The question is what to do with it. Norway has built an ecosystem of offshore engineering and technology around its oil industry, whilst Australia has done something similar with its mining sector. Deliberate policies are needed, yet the government relies almost exclusively on large-scale extractive investments. Peru has enjoyed growth and sound public finances thanks to mining, but has retained a very high level of informality and remains far poorer than Argentina. And then there are knowledge-based services – software and professional consultancy – which in 2025 accounted for exports of around 10 billion dollars, almost 10 per cent of the total. It is not a question of reviving the industry of the 1970s, but of building a new industrialisation fit for the 21st century.

One explanation lies in social ties: family, friends and shared meals are a valuable source of well-being. Money plays a major role in happiness, but the quality of relationships is also important. In other developing regions, family and community ties are just as strong, but are often accompanied by strict norms that restrict the freedoms of women and young people in particular. In Latin America, on the other hand, warm affection is intertwined with a culture that has greatly expanded personal freedoms: when asked how much freedom they feel they have in choosing how to live, Latin Americans rank among the highest in the world. But there is a paradox: we place great trust in our immediate circle and little in institutions and strangers. As for violence, the region has murder rates that are abnormally high for its level of development, fuelled by inequality, the fragility of security forces, the ease with which weapons can be obtained and, above all, the expansion of criminal organisations linked to drug trafficking. However, this violence is highly concentrated: Argentina, Chile and Uruguay have much lower rates, whilst in Brazil and Mexico, cities of extreme violence coexist alongside peaceful ones. Development has many dimensions, which do not all progress in unison.

- What can Latin America contribute to a debate on development that is usually modelled on Western or Asian examples?

To a great extent, because its history is riddled with paradoxes. To understand them, one must look back over the long term. Miguel Ángel Centeno shows that in Europe, centuries of war led to the establishment of powerful bureaucracies and tax systems, whilst in Latin America, states were formed through different processes, with weaker institutional capacities. Japan and Korea, for their part, boasted ancient traditions of statehood. Seventy years ago, Argentina, Brazil and Mexico were more industrialised and wealthier than much of Asia; subsequently, their trajectories were reversed. In the twentieth century, between the 1930s and the 1980s, the region experienced its most rapid period of growth, but our industrialisation was geared towards the domestic market, whilst South Korea and Taiwan developed a formidable export-oriented economy, aided in part by access to the American market during the Cold War years. With the debt crisis of the 1980s, this difference proved decisive: we had accumulated foreign debt without equivalent exports. The crisis cut short an unfinished industrialisation process just as Asia – and later China – were gathering pace. Thus, we built urbanised societies, with clear achievements in education, healthcare and rights, without completing the transformation of our productive sector. It is no coincidence that ECLAC, through Prebisch and Furtado, raised questions about specialisation and technological gaps that are once again highly topical now that industrial policy is back at the centre of attention in the United States and Europe. And Latin America reminds us that well-being has dimensions – such as personal relationships and individual freedom – that debates on growth tend to overlook.