Shocks and Recoveries: Latin America's Crisis Patterns in Global Perspective (1820–2025)

Abstract

This article studies crises and recovery in Latin America since Independence. It compares crises in Latin America with other developing and developed countries for 1820–2025. We use a two‐stage mechanism: first, we determine when there is a crisis and second, we establish the magnitude of that crisis. We will look at synchronized crises in Latin America and verify if they relate with crises in the World Economy. For data on crises, we rely on the long‐term GDP database of the Maddison Project. However, the Maddison Project does not provide yearly data for a large part of the 1820–2025 period. We estimate annual data for all countries and years of our sample. However, earlier data, especially those before 1870, are weaker as their fluctuations are, in many cases, based on trade data. In Latin America, the greatest crises were the 1929 and the 1980s crisis. On the world scale, the greatest crisis was the 1929 one. Maybe surprisingly, in the long‐term Latin America is not the most crisis‐prone area in the world, this distinction goes to Europe. Finally, the only crisis in two centuries that affected all 23 countries of our sample is the 2020–2021 Covid crisis.