LONG RUN ECONOMIC GROWTH PERFORMANCE IN LATIN AMERICA – 1820–2016

Abstract

AbstractThis paper provides an assessment of Latin America's long‐run performance from a comparative and historical perspective and concentrates on quantification of long‐run GDP growth and measurement of factor inputs and total factor productivity (TFP). Growth accounting shows the contribution of factor inputs (capital and labor) and TFP to output growth. What is new: capital and labor services are estimated for a group of nine countries, Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay, and Venezuela, and we widen the time frame of analysis to 1820–2016. This kind of exercise may serve different purposes such as explaining differences in growth rates between countries and assessing the role of technical progress. The overall GDP growth rate of the Latin American economies over the 1820–2016 period was somewhat above 3%. In the long run, the main differences in factor contributions to growth can be found in capital and, especially, in TFP. Capital contributed on average 1.45% to GDP growth over the whole period. However, the main culprit of the mediocre performance of Latin America compared to other developed and developing countries is TFP. TFP contributed over the whole period a mere 0.25% to Latin American GDP growth and was negative in several subperiods.