The Anatomy of a Growth Trap: Diagnosing Binding Constraints in Tucumán, Argentina

Traditional approaches to economic growth often emphasize broad structural reforms, yet their effectiveness depends crucially on context. Policies that are transformative in one economy may be ineffective—or even counterproductive—in another. The Growth Diagnostics framework addresses this challenge by focusing on the specific constraints that limit investment and growth in a given place and time. This paper applies the framework to the Argentine province of Tucumán, where persistent gaps in income and productivity suggest the presence of binding constraints to long-run development. The analysis highlights three central obstacles: (i) a scarcity of highly skilled human capital, which depresses social returns; (ii) high tax pressure, which reduces the appropriability of investment returns; and (iii) low economic complexity, which limits opportunities for productive diversification. Beyond these substantive findings, the paper contributes methodologically by adapting Growth Diagnostics to the subnational level through novel empirical tests and sectoral applications. In doing so, it enriches the literature on regional development in Latin America and provides policy-relevant insights for designing reforms tailored to Tucumán’s specific challenges.