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Economic Reforms, Financial Development and Growth: Lessons from the Chilean Experience

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Author Info
Leonardo Hernández
Fernando Parro
Abstract

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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Publisher Info
Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.

Volume (Year): 45 (2008)
Issue (Month): 131 ()
Pages: 59-103
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Handle: RePEc:ioe:cuadec:v:45:y:2008:i:131:p:59-103

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Related research
Keywords: Economic Growth; Reforms; Institutions; Financial Development.;

Find related papers by JEL classification:
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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This page was last updated on 2009-12-9.


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