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Endogenous Growth and Exogenous Shocks in Latin America during the Twentieth Century

  • Pablo Astorga

    ()

    (Latin American Centre, St Antony’s College, Oxford)

  • Ame E. Bergés
  • Valpy Fitzgerald

Using a new database for the whole 1900–2000 period, this paper estimates the relative contribution of endogenous and exogenous factors in GDP and productivity growth in each of the six larger Latin American economies with multivariate annual models, and complements these with a single aggregate model using panel data by decade to test for convergence within the region and with the US. Our method is innovative as it includes external economic shocks as well as endogenous growth variables. The main findings are: (i) that investment contributed most to growth during the middle of the century when the region was relatively closed to the world economy and state was proactive; (ii) that the six main economies did converge considerably over the century due to improvements in resource allocation, advances in health and education and increased investment effort; (iii) that these improvements were not, however, enough to produce convergence between Latin America and US; and (iv) that terms of trade volatility, trade and interest rate shocks were major obstacle to both sustained economic growth and catching up.

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Paper provided by Economics Group, Nuffield College, University of Oxford in its series Oxford University Economic and Social History Series with number _057.

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Length: 44 pages
Date of creation: 01 Mar 2005
Date of revision:
Handle: RePEc:nuf:esohwp:_057
Contact details of provider: Web page: http://www.nuff.ox.ac.uk/economics/

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  1. Perron, P., 1994. "Further Evidence on Breaking Trend Functions in Macroeconomic Variables," Cahiers de recherche 9421, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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  11. José De Gregorio & Jong-Wha Lee, 1999. "Economic Growth in Latin America: Sources and Prospects," Documentos de Trabajo 66, Centro de Economía Aplicada, Universidad de Chile.
  12. Leandro Prados de la Escosura, 2004. "When Did Latin America Fall Behind?.Evidence From Long-Run International Inequality," Working Papers in Economic History wh046604, Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales.
  13. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
  14. Antonio E. Noriega & Araceli Ramírez-Zamora, 1999. "Unit roots and multiple structural breaks in real output," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 14(2), pages 163-188.
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