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Long run economic development in Latin America in a comparative perspective: proximate and ultimate causes

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  • Hofman, André A.

Abstract

This paper describes trends in economic growth and its causes in several Latin American countries in the 20th century. In the explanatory scheme, a distinction is made between 'proximate' and 'ultimate' causes of economic growth. Proximate causes are those areas of causality where models and quantification is possible, whereas ultimate causes are much more difficult to quantify. Some elements in the realm of the ultimate causes (like institutions and income distribution) will be analysed in an historical perspective and others, especially total factor productivity and growth accounting, in the proximate scheme. Latin America's performance is also compared to developed and other developing countries. The paper provides a quantitative assessment of Latin American economic growth performance in the twentieth century in a comparative perspective. Within the region it was found that heterogeneity has not decreased and no clear tendencies of convergence can be detected. The reform process of the late 1980s and 1990s was implemented because of the profound crisis of the 1980s and the detection of some structural weaknesses in the Latin American economies. Some aggressive and early reformers show impressive growth results (e.g. Chile) but on the whole, the growth performance in the 1990s has been rather disappointing. The paper stresses the fact that the proximate causes are not independent of the ultimate causes of growth as to a significant degree, proximate causes are dimensions through which ultimate causes can be seen to operate. At the proximate level, the interaction between capital accumulation and technological progress is an example of this interdependence. At the ultimate level, there exists interaction between the institutional framework of a society and the implementation of economic policy. An example of interdependence between the ultimate and proximate levels is the relationship between technological progress and the institutional context. The paper concludes with a description of some of the most important characteristics of Latin America in the realm of the ultimate causes. The interdependence between proximate and ultimate is mainly analysed in terms of growth. Besides the unsatisfactory growth performance, equity aspects are another worrying characteristic of contemporary trends in the region and institutional factors are probably key determinants in explaining the weak relationship between growth and equity.

Suggested Citation

  • Hofman, André A., 2001. "Long run economic development in Latin America in a comparative perspective: proximate and ultimate causes," Macroeconomía del Desarrollo 5460, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    • Handle: RePEc:ecr:col037:5460
    Note: Includes bibliography
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    3. Cimoli, Mario & Correa, Nelson & Jorge, Katz & Rogério, Studart, 2003. "Institutional Requirements for Market-led Development in Latin America," MPRA Paper 2756, University Library of Munich, Germany, revised Jan 2003.
    4. Cecilia Garcia-Penalosa & Eve Caroli & Philippe Aghion, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December.
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    Cited by:

    1. Abarca, Leopoldo & Sotelsek, Daniel F., 2010. "Latin America: incorporating environmental factors into the measurement of production efficiency and technical change," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    2. Hofman, André A. & Tapia, Heriberto, 2003. "Potential output in Latin America: a standard approach for the 1950-2002 period," Estudios Estadísticos 4721, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Solimano, Andrés, 2006. "Asset accumulation by the middle class and the poor in Latin America: political economy and governance dimensions," Macroeconomía del Desarrollo 5422, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. Juan Carlos Moreno-Brid & Stefanie Garry, 2016. "Economic performance in Latin America in the 2000s: recession, recovery, and resilience?," Oxford Development Studies, Taylor & Francis Journals, vol. 44(4), pages 384-400, October.
    5. Watts, Nathalie & Solimano, Andrés, 2005. "International migration, capital flows and the global economy: a long run view," Macroeconomía del Desarrollo 5400, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. repec:qua:journl:v:6:y:2009:i:1:p:11-30 is not listed on IDEAS
    7. Lavan Mahadeva & Javier Gómez Pineda, 2009. "The international cycle and Colombian monetary policy," Borradores de Economia 557, Banco de la Republica de Colombia.
    8. Prados de la Escosura, Leandro, 2005. "Growth, inequality, and poverty in Latin America: historical evidence, controlled conjectures," IFCS - Working Papers in Economic History.WH wh054104, Universidad Carlos III de Madrid. Instituto Figuerola.
    9. Gutiérrez, Mario A. & Solimano, Andrés, 2006. "Savings, investment and growth in the global age: analytical and policy issues," Macroeconomía del Desarrollo 5419, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Moramay L�pez-Alonso & Roberto V�lez-Grajales, 2015. "Measuring Inequality in Living Standards with Anthropometric Indicators: The Case of Mexico 1850-1986," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 16(3), pages 374-396, August.
    11. Solimano, Andrés & Soto, Raimundo, 2005. "Economic growth in Latin America in the late 20th century: evidence and interpretation," Macroeconomía del Desarrollo 5398, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    12. Solimano, Andrés, 2006. "The international mobility of talent and its impact on global development: an overview," Macroeconomía del Desarrollo 5418, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    13. Solimano, Andrés, 2004. "Political violence and economic development in Latin America: issues and evidence," Macroeconomía del Desarrollo 5395, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Gutiérrez, Mario A., 2007. "Economic growth in Latin America and the Caribbean: growth transitions rather than steady states," Macroeconomía del Desarrollo 5425, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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