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Latin American economies have improved recently, but still performing poorly. Pros and Cons.

Public Services and the Cost of Bureaucracy, jpg uploaded to Flickr by Kongharald

ITS economies may have improved recently, but much of Latin America has performed poorly over the past two generations. The gap in income per head between the region and developed countries has widened since 1960, while many east Asian countries that were poorer have leapfrogged ahead. The root cause has been Latin America’s slow—or even negative—growth in productivity, according to a new study by economists at the Inter-American Development Bank*.

Today everything seems to go smooth in Latin America. The achievement of economic and financial stability in the past few years has in turn seen productivity growth rise. The IDB’s study shows that it could rise faster still, boosting incomes, if the politicians take productivity into account when they draw up tax, social and public-investment policies. 

However, in the long run, Latin American economies have performed poorly. Productivity growth—gains in the efficiency with which capital, labour and technology are used in an economy—is the elusive holy grail of economic development. It is true that most Latin American countries have…READ MORE HERE