Despite reform efforts, the economic performance of Latin American countries during the 1990s was disappointing with the exception of Chile, which grew at almost 7% per year. This paper tries to explain this difference. Following recent literature that highlights the role played by institutions and policies on economicgrowth, we estimate a cross-section econometric model over the 1960-2005 period and find that Chile’s better performance can largely be explained by a combination of better institutions and reforms that have been deeper and broader in scope than those in the rest of Latin America. In addition, we estimate that improving institutions in other Latin American countries to the Chilean standard would have increased per-capita GDP growth rates by about one and a half percentage points.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.