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Reform and Growth in Latin America: All Pain, No Gain?

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  • Fernandez-Arias, Eduardo
  • Montiel, Peter

Abstract

This paper addresses the adequacy of post-reform growth in Latin America in the 1990s on the basis of international comparisons as well as historical and other relevant standards, analytically exploring and empirically testing a number of hypotheses to explain the perceived dissatisfaction with growth performance in the region. We find that there is no "growth puzzle" in Latin America. Growth has not been higher in the post-reform period not because of a failure of reforms to yield the growth payoff that they should have been expected to do on the basis of international experience, but because of the combination of an unfavorable external environment with insufficient depth and breadth of reform. We also estimate the long-run growth payoff of macroeconomic reforms, the additional gains that can be achieved by deepening this first generation of reforms, and the potential payoff from broadening the scope of reform into a second generation of reforms encompassing deeper structural and institutional areas.
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Suggested Citation

  • Fernandez-Arias, Eduardo & Montiel, Peter, 1997. "Reform and Growth in Latin America: All Pain, No Gain?," Working Papers 244236, Inter-American Development Bank.
  • Handle: RePEc:ags:iadbwp:244236
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    File URL: http://ageconsearch.umn.edu/record/244236/files/inter-american-db-oce-workingpapers-351.pdf
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    References listed on IDEAS

    as
    1. Levine, Ross & Zervos, Sara, 1993. "Looking at the facts : what we know about policy and growth from cross-country analysis," Policy Research Working Paper Series 1115, The World Bank.
    2. Robert J. Barro, 1991. "A Cross-Country Study of Growth, Saving, and Government," NBER Chapters,in: National Saving and Economic Performance, pages 271-304 National Bureau of Economic Research, Inc.
    3. King, Robert G. & Levine, Ross, 1992. "Financial indicators and growth in a cross section of countries," Policy Research Working Paper Series 819, The World Bank.
    4. De Gregorio, Jose, 1992. "The effects of inflation on economic growth : Lessons from Latin America," European Economic Review, Elsevier, vol. 36(2-3), pages 417-425, April.
    5. De Gregorio, Jose, 1992. "Economic growth in Latin America," Journal of Development Economics, Elsevier, vol. 39(1), pages 59-84, July.
    6. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    7. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February.
    8. Levine, Ross & Zervos, Sara J, 1993. "What We Have Learned about Policy and Growth from Cross-Country Regressions?," American Economic Review, American Economic Association, vol. 83(2), pages 426-430, May.
    9. Roubini, Nouriel & Sala-i-Martin, Xavier, 1992. "Financial repression and economic growth," Journal of Development Economics, Elsevier, vol. 39(1), pages 5-30, July.
    10. Joel Slemrod, 1995. "What Do Cross-Country Studies Teach about Government Involvement, Prosperity, and Economic Growth?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 373-431.
    11. Eduardo Lora, 1997. "Una década de reformas estructurales en América Latina: ¿Qué se ha reformado y cómo cuantificarlo?," Research Department Publications 4075, Inter-American Development Bank, Research Department.
    12. Dollar, David, 1992. "Outward-Oriented Developing Economies Really Do Grow More Rapidly: Evidence from 95 LDCs, 1976-1985," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 523-544, April.
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    More about this item

    Keywords

    International Development;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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