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Latin America in the Twentieth Century: stagnation, then Collapse

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Abstract

Most Latin American countries experienced their last peak in output per capita relative to the United States’ between 1971 and 1982. Prior to this peak per capita output was rapidly catching up to the developed world. Twenty years after the peak the average country’s relative per capita output was 68% of its peak level. A growth accounting exercise shows that between 1960 and 1985 the contribution of physical capital to growth, at 74%, was more than twice the world’s average. There is an investment/productivity puzzle since capital accumulation was among the highest in the world and productivity growth one of the lowest. Import Substitution Industrialization and targeted investment subsidies may be the key to understanding Latin America’s lack of development.

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  • Pablo Andres Neumeyer & Hugo Hopenhayn, 2004. "Latin America in the Twentieth Century: stagnation, then Collapse," Department of Economics Working Papers 028, Universidad Torcuato Di Tella.
  • Handle: RePEc:udt:wpecon:028
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    References listed on IDEAS

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    1. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    2. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    3. Peter J. Klenow & Mark Bils, 2000. "Does Schooling Cause Growth?," American Economic Review, American Economic Association, vol. 90(5), pages 1160-1183, December.
    4. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
    5. 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.
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    Cited by:

    1. Busso Matias & Madrigal Lucia & Pagés Carmen, 2013. "Productivity and resource misallocation in Latin America," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-30, June.
    2. Harold L. Cole & Lee E. Ohanian & Alvaro Riascos & James A. Schmitz, 2006. "Latin America in the rearview mirror," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sep.
    3. John W. Dawson & Mark C. Strazicich, 2006. "Time Series Tests of Income Convergence with Two Structural Breaks: An Update and Extension," Working Papers 06-01, Department of Economics, Appalachian State University.
    4. Samuel de Abreu Pessoa & Pedro Cavalcanti Ferreira, 2004. "The Evolution of International Output Differences (1960-2000): from Factors to Productivity," 2004 Meeting Papers 576, Society for Economic Dynamics.

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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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