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Latin America and the middle-income trap

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  • Paus, Eva

Abstract

Promising economic growth during the 2000s obfuscates the reality that Latin American countries are facing the acute threat of a middle-income trap. In a review of the literature on the middle-income trap I distinguish two approaches to the middle-income trap: one focuses mainly on the lack of structural change, the driving forces behind it, and the national and global context in which it unfolds; the other stresses growth slowdowns irrespective of time and place. I offer an extension of the structural change approach with an emphasis on the implications of the current globalization process. A productive capabilities-focused analysis reveals serious gaps in social and firm-level capabilities in Latin America economies, though the magnitude differs across indicators and countries. The experiences of China and small latecomers trying to move from the middle to the high-income level (Chile, the Dominican Republic, Jordan, Ireland, and Singapore) suggest that a cohesive productive capabilities-focused development strategy holds out great promise for generating growth-enhancing structural change. I conclude with a discussion of the key challenges Latin American countries have to overcome for the successful implementation of such a strategy to avoid the middle-income trap.

Suggested Citation

  • Paus, Eva, 2014. "Latin America and the middle-income trap," Financiamiento para el Desarrollo 250, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  • Handle: RePEc:ecr:col035:36816
    Note: Includes bibliography.
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    File URL: http://repositorio.cepal.org/handle/11362/36816
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    References listed on IDEAS

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    1. repec:pal:eurjdr:v:30:y:2018:i:3:d:10.1057_s41287-018-0149-0 is not listed on IDEAS
    2. repec:bla:glopol:v:7:y:2016:i:4:p:469-480 is not listed on IDEAS

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    Keywords

    CONDICIONES ECONOMICAS; INGRESOS; POLITICA ECONOMICA; ESTUDIOS DE CASOS; ECONOMIC CONDITIONS; INCOME; ECONOMIC POLICY; CASE STUDIES;

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