2.2.8 Impact of coffee over
the world
The coffee sector played a seminal role for the economic and
social modernization of Latin America. It was the main dynamic factor for the
economies of many countries and a pivotal element of social transformation. It
was, perhaps, the principal force behind the introduction of free labor in many
Latin American countries. Today, at the beginning of a new century, the coffee
sector continues to play an important role in the social and economic coffee
sector played an important role in many countries such as Brazil, Colombia,
Costa Rica,and a bit later and to a lesser degree in other countries in South
and Central America. To be sure,the coffee sector grew during that period to
become a catalyst for the economic and socialmodernization in those
countries.
On the economic side, coffee was one of the most important
export items, generatinghard currency and having a major impact on the gross
domestic product. The coffee sector wasone of the pillars of the economy. For
example, around 1925, coffee represented around seventypercent of Brazil's
total exports and around eighty percent of Colombia's total exports.
As Werner Baer states in his book «The Brazilian
Economy», coffee had many secondaryeffects on the economy such as
employment of free immigrant labor, foreign investment ininfrastructure,
capital accumulation of coffee growers, and the derived growth of industry.1
Additionally, the demand for free labor led many coffee
producers in Brazil to join the campaignfor the abolition of slavery.
Similarly, Roberto Junguito and Diego Pizano in their book«Production de
Café en Colombia» reminds us that the economic relevance of coffee
was notlimited to its impact on growth via increased exports.2 They suggest
that coffee has had a clearlink with the development of other sectors and with
the overall development process ofColombia. Among other impacts they stress the
links between coffee production withemployment and the social situation given
the activity's high demand for labor, its relation withpublic finances, its
impact on industrial, regional, and institutional development and its role in
national politics.
Coffee production also stimulated the insertion of Latin
American economies in the world trade. In this period, given its high level of
dependence on external markets, the price of coffee was the principal factor in
guaranteeing equilibrium in the balance of payments and, as a consequence,
guaranteeing macroeconomic stability and economic growth. Income generated by
coffee production and exports created domestic demand in the industrial sector
in many countries, allowing for the diversification of their economies.In other
words, domestically, social development was highly dependent on the jobscreated
and sustained by the production and export of coffee. There is no doubt that
coffee was adynamic factor in many countries of Latin America in the early
twentieth century.
Income generated by coffee exports had an important role in
creating demand for the domesticmanufacturing sector, and, according to some
analysts, export tax revenues helped thegovernment to support the industrial
development in many countries of the region. It is clear that coffee is on the
base of the economic and social development in manyareas of our region. At its
peak, the coffee sector generated thousands of jobs and allowed forsome social
mobility of people involved in the activity. Jobs, wages, freedom, migration,
andsocial mobility were the elements of the coffee economy in such countries as
Brazil, Colombia,El Salvador, and Guatemala.
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