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Structural change and the BOP-constraint: why did Latin America fail to converge?

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  • Mario Cimoli
  • Gabriel Porcile
  • Sebastián Rovira

Abstract

This paper discusses why Latin America failed to achieve sustainable convergence with the developed world since 1960 and analyses different phases of convergence and divergence using a structuralist-Keynesian approach. First, it is argued that there are critical differences between Latin America, the developed economies and the Asian economies as regards the evolution of the income elasticity of the demand for imports (π), the rate of growth of exports and the balance-of-payments-constrained rate of growth. The income elasticity of the demand for imports in Latin America showed an upward trend, particularly after the mid-1970s, which was not matched by a similar increase in exports--a pattern in sharp contrast with that of the East Asian countries. The evolution of π and exports are used to set forth a typology of Latin American economic growth since 1960. In addition, the paper relates elasticities and the less favourable Latin American performance to the intensity and direction of structural change. Using a broad sample of developed and developing economies, it is shown that the developing countries that succeed in reducing the income gap are those that transformed their economic structures in favour of sectors with higher Schumpeterian and Keynesian efficiency. Copyright The Author 2009. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

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  • Mario Cimoli & Gabriel Porcile & Sebastián Rovira, 2010. "Structural change and the BOP-constraint: why did Latin America fail to converge?," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 389-411, March.
  • Handle: RePEc:oup:cambje:v:34:y:2010:i:2:p:389-411
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    File URL: http://hdl.handle.net/10.1093/cje/ben060
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    1. Erdem, Esra & Glyn, Andrew, 2001. " Job Deficits in UK Regions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(0), pages 737-752, Special I.
    2. Robert Rowthorn, 2005. "Combined and Uneven Development: Reflections on the North-South Divide," Working Papers wp305, Centre for Business Research, University of Cambridge.
    3. Singh, Ajit, 1977. "UK Industry and the World Economy: A Case of De-industrialisation?," Cambridge Journal of Economics, Oxford University Press, vol. 1(2), pages 113-136, June.
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