Development versus Structural Heterogeneity: Trajectories of Economic Growth and Income Inequalities in Latin American Countries from the 1980s

Abstract

This article deals with income inequalities in Latin American countries in the last four decades, relating to economic growth and development. Founded on a structural heterogeneity approach (both its original formulation and recent advances), we adopt a concept of development as a structural process of reducing inequalities. Particularly, we discuss the role of economic policy and institutions on economic growth, income inequalities and development. Empirically, we trace the evolution of economic growth and income inequalities in selected Latin American countries from the period of dominant adoption of neoliberal policies, in the 1980s, to recent decades, when these policies have been partially contested and alternative policies have been established in some cases. In this context, particular attention was devoted to the evolution of social expenditures, identified as a key factor to influence income inequalities. According to the availability of data, we contrast income inequalities in selected Latin American countries and OECD countries by collecting the Gini Index and calculating the Palma ratio for this four-decade period. We analyze the results relating to theoretical basis and institutional elements. Thus, based on the literature review and data analyzed, we contrast trajectories during 1980s and 2000s, stressing that different oriented economic and social policies and institutions lead to different outcomes, which means that trajectories of the countries are mainly outcomes of “choices” made at the national level.