Latin American Growth Research Articles

The Dismantling of Capital Controls after Bretton Woods and Latin American Productivity

The recent economic history of global integration has been characterized by a dismantling of capital controls and increased foreign direct investment (FDI). This paper explores the role of impediments to international capital mobility, foreign direct investment, and technology diffusion in shaping Latin American economic growth. First, the paper summarizes and quantifies the effects of the Bretton Woods international financial system in Latin America. Then, I study the consequences of capital controls--and their dismantling--on FDI and trade-induced technological advancements and their role in shaping local development, especially in the 1990s after the implementation of several trade liberalization policies.

Threshold effects of terms of trade on Latin American growth

This paper investigates nonlinear relationships between terms of trade volatility (totvol) and economic growth in 14 Latin American economies from 1997 to 2014. In the 2000s, Latin American countries experienced accelerated economic growth often attributed to commodity price booms. We split the sample into two regimes based on totvol thresholds determined by bootstrap techniques. Fixed effects, instrumental variable and dynamic panel regressions address endogeneity in trade growth, subject to traditional economic channels such as domestic investment, population growth, exchange rate, government size, and institutions. We find statistically significant thresholds and stronger trade-growth links during the 2000s commodity boom and in larger economies.

Tech Latinas: Latin American Women for Technology

Aim/Purpose: The directors of Tech Latinas were happy with what they had created and the impact their company had made in Ecuador, Peru and Guatemala. Now that they had seen their vision come to fruition in ways that were astounding to them. They wanted to take the next steps in growing their business so Tech Latinas mission could spread beyond its current bounds. Before working out the logistics, the Tech Latina team expanded their vision. They wanted to scale Tech Latinas throughout Latin America. They hoped to find the best talent among the 37 million young women in these countries who were currently either unemployed or informally employed. They estimated that 1.2 million web developers in Latin America would be required that by 2025. Background: The entrepreneurial tech wave has hit Latin America hard, and it appears to be gaining momentum. A new generation of millennials and post-millennials, led by a group of early entrepreneurs in their late 30s to early 50s, believes that it can improve lives by creating new and better solutions to everyday problems. One such area is teaching coding and tech skills to women who live in middle to low-income Latin American households. Despite the advantages and opportunities, there are also great obstacles to make it all happen in Latin America. Some cultural and some systemic. Culturally, Latin Americans are very averse to risk, and most only invest in “secure” ventures such as real estate. The lack of financial education is a key factor that does not allow potential entrepreneurs to thrive. On the systemic side, corruption, lack of institutional trust and impunity are probably the biggest hurdles to surpass in the next few years. Companies need to think globally and compete against global competitors. Methodology: Data was collected through a qualitative approach with several in-depth interviews Contribution: In following trends of Latin American growth and development, the main opportunities will end up being in the technology sector as advances in education and know-how disseminate. The hope is that this knowledge gap will provide jobs for millions trying to lift themselves out of poverty. Findings: That nascent ventures in Latin America face different and unique challages. The ability to scale and the lack of capital that would invest in social causes is unfortunately scarce in the region. This makes it difficult to Recommendations for Practitioners: This case could be used for discussion around lessons from emerging market entrepreneurship. Many strategies of the struggles and triumphs of Latin American entrepreneurs are worth noting as practitioners due to the acute necessity-driven approach to many Latin American entrepreneurs toward venture success. Recommendation for Researchers: Maybe employing a scale of some sort to differentiate net impact socially and economically these tech educational training facilities Impact on Society: That there is a need to support organic entrepreneurial efforts in not only gaining returns but supporting social causes that lift societies. Also, it is a wise investment to invest in women and in emerging economies. Future Research: It would be interesting to further follow the Tech Latinas and other initiatives in this area of knowledge transfer and economic development. It would be interesting to do a study or a scale of results of impact between countries not only in Latin America but other women coding and IT training efforts around the world.

Producción científica del Ecuador en el ámbito agropecuario: caso del Instituto Nacional de Investigaciones Agropecuarias, periodo 2014-2019

La producción científica en Ecuador ha seguido un patrón similar a la evolución de otros países latinoamericanos, existiendo escasa generación de documentos indexados; pero en los últimos años se ha incrementado. El INIAP ha plasmado los resultados de sus investigaciones en publicaciones técnicas, dípticos, guías, manuales, entre otros. Desde el año 2014 ha tenido un aumento sostenido en su producción científica, debido a nueva reglamentación de acreditación e incentivos a investigadores. El objetivo de la presente investigación fue realizar un análisis de la producción científica del INIAP durante el periodo 2014-2019. Los resultados mostraron un aumentó 3,1 veces durante el periodo analizado, superando el crecimiento latinoamericano en ese mismo tiempo. Se determinó que más del 54% de las publicaciones del INIAP tienen colaboración internacional y el 62% de publicaciones están indexadas en revistas con índice SJR. Estos resultados indican que INIAP ha incrementado su producción y calidad científica en investigación agropecuaria.

Accounting for Latin American Growth: A Trade and Macroeconomic Perspective

This paper reviews Latin America’s growth over the last half century using a novel method that decomposes countries’ growth relative to the world into three factors: (1) the traction on growth exerted by export expansions (export pull), (2) the growth implications of changes in external imbalances (external leverage), and (3) the economy’s ability to expand faster than its imports (domestic response). It applies this method to explore the macroeconomic and trade drivers behind several historical growth trends: (1) the success or failure of Latin America’s import-substitution industrialization, (2) Mexico’s persistent slow growth despite a successful switch to export-oriented industrialization, (3) the ability or failure of South American commodity exporters to grow smoothly based on commodities, and (4) the heterogeneous growth performance of Central American services producers and exporters. With different mixes and patterns by subregion, insufficient export pulls, depressed domestic responses, and bursts in external leverage all played major roles in explaining the region’s disappointing growth.

Latin American Growth and Exports to China

ABSTRACTAfter 2001, the booming trade between China and Latin American and the Caribbean countries (LAC) has led to concerns about a potential ‘resource curse’ and losses in manufacturing due to rising import competition. Little attention was paid to potential gains to LAC from growing Chinese demand for commodities. I address this issue empirically adopting a difference-in-difference framework and find that China's demand did deliver significantly higher growth rates to LAC exporters over the last decade and a half.

Análisis de la producción científica del Ecuador e impacto de la colaboración internacional en el periodo 2006-2015

La producción científica del Ecuador en relación con otros países latinoamericanos ha sido históricamente baja, en gran parte debido a la falta de cultura científica y políticas adecuadas que promuevan la investigación, además del descuido en priorizar la investigación en las universidades. Sin embargo, en los últimos 10 años, el gobierno ha implementado diversas políticas para ayudar a remediar esta situación. Presentamos un análisis bibliométrico de la producción de la investigación ecuatoriana durante el período 2006-2015. Los resultados muestran que la producción científica de Ecuador ha aumentado 5.16 veces en los últimos años, lo que supera el crecimiento latinoamericano. Más del 80% de las publicaciones ecuatorianas incluyen colaboración internacional, principalmente con EE.UU., España, el Reino Unido, Alemania, Francia, Brasil y Colombia. Se discuten las implicaciones de política pública.

Research Productivity and International Collaboration: A Study of Ecuadorian Science

Ecuador’s research output relative to other Latin American countries has been low historically; however, over the last 10 years, the government has put various policies in place to help remedy this situation. This is an analysis of Ecuadorian research productivity from 2006 to 2015. The scientific productivity of Ecuador has increased 5.16 times over the past years, exceeding Latin American growth. Over 80% of Ecuadorian publications include international collaboration mainly with the United States and some European and Latin American countries.

An approach to the broadband effect on Latin American growth: A structural model

This paper analyses the fixed broadband penetration effect on Latin American economic growth. The methodology employed consists of using a simultaneous equation model based on Koutroumpis (2009) and Katz and Callorda (2013). To aid this process, we use country level data from the World Bank and the Regional Dialogue about the Information Society-DIRSI for the 2010-2014 period. The results obtained stress the importance of broadband penetration for economic growth in Latin America.

Das Wissenskapital der Nationen: gute Bildung als Wachstumsmotor

The long run prosperity of nations is directly related to the skills of their population. The relevant cognitive skills — the “knowledge capital” of a nation — can be measured well by international math and science tests. The consideration of knowledge capital can completely account for the Latin American growth puzzle and the East Asian growth miracle. Several analyses suggest that the relationship depicts a causal effect of skills. According to the evidence, an understanding of long run growth ultimately has to rest on the knowledge capital of nations. To further long run prosperity, policies should focus on education. Effective education systems align incentives with achievement through better educational practices such as external exams, school autonomy, choice and competition.

The impact of exports to China on Latin American growth

This article analyzes the relationship between GDP growth in seven major Latin American countries and China’s demand for their exports. GLS panel estimation using annual data for the period 1994–2013 shows that the relationship was both statistically and economically significant. Control variables found to be significant in positively affecting GDP growth include the investment-to-output ratio, the exchange rate, and the terms of trade, and, in negatively affecting it, population growth and the unemployment rate. Consistent with recent literature, foreign direct investment was found not to be significant. A sharp drop in exports to China for many of the countries in the sample in 2015 raises questions about the region’s vulnerability to China’s growth slowdown.

Growth, distribution, and sectoral heterogeneity: Reading the Kaleckians in Latin America

Abstract The aim of this paper is to explore a parallelism between two episodes in the history of economic thought in order to suggest that the interaction between them can contribute to the research on Kaleckian growth and distribution models. First, a brief summary of the theoretical development from Steindl's stagnationist claims to the debate about demand regimes is offered. Then, a more detailed account is provided of the Latin American debate that began with Furtado's stagnationist claims and resulted in the formulation of models of social articulation and disarticulation. Finally, an analytical classification of Kaleckian and Latin American growth and distribution models is provided, indicating the way in which sectoral heterogeneity and demand composition can act as a plausible link between growth and distribution.

Latin America after the global crisis: the role of export-led and tradable-led growth regimes

Is the ongoing economic slowdown in industrialized countries likely to impact Latin American growth negatively in the medium- to long-run? This paper considers various transmission channels that work through trade in goods and services, and finds econometric evidence suggesting that shrinking global imbalances may create problems for Latin America. Specifically, using panel data analysis, we find that the trade balance as a proportion of GDP is positively associated with Latin American economic growth over the period 1953–2009. We then develop a simple dynamic model to help explain our main finding through investment and saving behaviour.

Schooling, educational achievement, and the Latin American growth puzzle

Latin American economic development has been perceived as a puzzle. The region has trailed most other world regions over the past half century despite relatively high initial development and school attainment levels. This puzzle, however, can be resolved by considering educational achievement, a direct measure of human capital. We introduce a new, more inclusive achievement measure that comes from splicing regional achievement tests into worldwide tests. In growth regressions, the positive growth effect of educational achievement fully accounts for the poor growth performance of Latin American countries. These results are confirmed in a number of instrumental-variable specifications that exploit plausibly exogenous achievement variation stemming from historical and institutional determinants of educational achievement. Finally, a development accounting analysis finds that, once educational achievement is included, human capital can account for between half and two thirds of the income differences between Latin America and the rest of the world.

Schooling, Cognitive Skills, and the Latin American Growth Puzzle

Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data.

The Second Transition: Eastern Europe in Perspective

The countries of Eastern Europe achieved two remarkable transitions in the short period of the last two decades: from plan to market and, then, in the run-up to and entry into the European Union, they rode a wave of global trade and financial market integration. Focusing on the second transition, this paper reaches three conclusions. First, by several metrics, East European and East Asian growth performances were about on par from the mid-1990s; both regions far surpassed Latin American growth. Second, the mechanisms of growth in East Europe and East Asia were, however, very different. East Europe relied on a distinctive-often discredited-model, embracing financial integration with structural change to compensate for appreciating real exchange rates. In contrast, East Asia contained further financial integration and maintained steady or depreciating real exchange rates. Third, the ongoing financial turbulence has, thus far, not had an obviously differential impact on emerging market regions: rather, the hot spots in each region reflect individual country vulnerabilities. If the East European growth model is distinctive, is it sustainable and replicable? The paper speculates on the possibilities.

Schooling, Cognitive Skills, and the Latin American Growth Puzzle

Economic development in Latin America has trailed most other world regions over the past four decades despite its relatively high initial development and school attainment levels. This puzzle can be resolved by considering the actual learning as expressed in tests of cognitive skills, on which Latin American countries consistently perform at the bottom. In growth models estimated across world regions, these low levels of cognitive skills can account for the poor growth performance of Latin America. Given the limitations of worldwide tests in discriminating performance at low levels, we also introduce measures from two regional tests designed to measure performance for all Latin American countries with internationally comparable income data. Our growth analysis using these data confirms the significant effects of cognitive skills on intra-regional variations. Splicing the new regional tests into the worldwide tests, we also confirm this effect in extended worldwide regressions, although it appears somewhat smaller in the regional Latin American data than in the worldwide data.

The Effect of External Conditions on Growth in Latin America

This paper investigates the sensitivity of Latin American GDP growth to external developments using a Bayesian vector-autoregressive model with informative steady-state priors. The model is estimated using quarterly data from 1994 to 2007 on key external and Latin American variables. It finds that 50 to 60 percent of the variation in Latin American GDP growth is accounted for by external shocks. Conditional forecasts for a variety of external scenarios suggest that Latin American growth is robust to moderate declines in commodity prices and external growth, but sensitive to more extreme shocks, particularly a combined external slowdown and tightening of world financial conditions.

Losing Ground: Latin American Growth from 1955 to 1999

I evaluate Latin America's relative economic performance by combining the Solow growth coefficients from 22 rich countries and the actual factor accumulation in the region. I find that actual income growth was consistently below simulated growth for all of the countries in the sample, indicating that low productivity is likely behind slow gross domestic product growth in the region. The low productivity growth is partially explained by government consumption spending, ethnic diversity, autocracy, export composition, and educational quality.

The Effect of External Conditionson Growth in Latin America

This paper investigates the sensitivity of Latin American GDP growth to external developments using a Bayesian VAR model with informative steady-state priors. The model is estimated on quarterly data from 1994 to 2006 on key external and Latin American variables. It finds that 50 to 60 percent of the variation in Latin American GDP growth is accounted for by external shocks. Conditional forecasts for a variety of external scenarios suggest that Latin American growth is robust to moderate declines in commodity prices and U.S. or world growth, but sensitive to more extreme shocks, particularly a combined external slowdown and tightening of world financial conditions.