Macroeconomic aspects of Spanish American independence: the effects of fiscal and currency fragmentation, 1800s-1860s

Economic historians explaining the divergent economic path in North and South America over time focus on the post-independence period in the former British or Spanish colonies. Their institutional explanation for Latin American economic backwardness is anchored in the political disorder that occurred in the postcolonial period, which did not provide the right conditions for economic growth. Yet, more important than political aspects, fiscal and monetary fragmentation of the Spanish Empire were major factors in hindering the economic growth later in the 19th century. This paper argues that economic struggle over resources determined political outcomes rather than the other way round. By assessing the macroeconomic effects of Independence on the contemporary and further economic and political development it shows that comparisons with North America are ill conceived. The study focuses on the disintegration of colonial fiscal and monetary regimes, that had organised the economy around silver mining and the export of silver currency as fiscal revenues, and the subsequent transformation into export-led economies, specialised in producing raw materials and foodstuff.