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 produce more development and help grow domestic businesses, which are not competitive with other international industries. However, this policy created a debt crisis in South America. South America was falling 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. It was only from the 1990s when countries in South America switched over to the system of Free-Market economy. This eventually pulled countries in South America out of the debt crisis. 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 servicesubsidies due to short-term rise in inflation. In contrast, Peru differed from other countries in the region - demonstrating increase in growth rates thanks tocopper 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.
Economic sectors
Agriculture
Through history, since the colonial period, the export of natural resources has been key factor for South America's economy. With a land that can be divided into four climatic regions, South America is a diverse land that is rich in natural resources. It has a wide variety of agricultural products, mineral wealth, plentiful freshwater and rich fisheries. As one of the most important contributors of the world's agricultural market, South America accounts for approximately 10% of the global agricultural product export. The different climatic regions are home for diverse types of crops. In the tropical climatic regions, two of the most important cash crops are coffee and cacao. South America dominates the global market in coffee production, having Brazil as the world's largest exporter of coffee. A report from the Council of Brazilian Coffee Exporters showed that the coffee industry earned US$5.4 billion in 2016, with the exports of different coffee varieties exceeding 34 million 60 kg bags. This accounts to 6.4% of Brazil's total annual agrobusiness exports of US$84.9. The report showed that by December 2016, the Brazilian coffee industry generated US$557 million in revenue by exporting 3.07 million bags of coffee. Additionally, in 2016 soybeans, grown in South America's temperate climates, had an export value of US$19B for Brazil, representing 10.4% of the total exports, and one of US$3.23B for Argentina, representing 5.7% of the country's total exports. Moreover, the soybean meal exportation represent 17.5% of Argentina's total exports, with an export value of $9.96B. Other exports from the tropical regions, such as the Amazon rainforest, include cashews and Brazil nuts, globally regarded as delicacies, as well as sugar, avocados, bananas, pineapples, oranges, grapefruits, and mangoes. The sugarcane cultivation has been the backbone of the economy since early colonial times, and Ecuador is the world's largest banana exporter In the temperate regions, corn is produced and it is the second most exported product in Argentinas. Additionally in cold climatic regions such as the Andes, there is a high production of crops such as quinoa, increasingly valued internationally, as well as the grazing of llamas, vicuñas and alpacas. These animals are bred for their wool and it is exported globally as a high-quality textile.
Industry
80% of manufacturing of the Latin America region falls on Argentina, Brazil and Mexico. Brazil has the third-largest manufacturing sector in the Americas. Accounting for 28.5 percent of GDP, Brazil's industries range from automobiles, steel, and petrochemicals to computers, aircraft, and consumer durables.
Mining
contributes about a third of the world copper production. Brazil is the world's leading producer of niobium and tantalum, and Peru is the largest silver producer and the second-ranked producer of bismuth and copper.
