Overcoming Latin America’s Growth Frustrations: The Macro and Mesoeconomic Links

  • José Antonio Ocampo


Whereas the moderate rates of economic growth of 1990–97 generated positive evaluations of Latin America’s reform efforts (see Edwards, 1995; IDB, 1997; and World Bank, 1997), the return to very slow rates of growth in 1998-2003 (a phenomenon that ECLAC characterized in 2002 as a new “lost half-decade”) brought an extensive reevaluation of these early assessments (ECLAC, 2003a; Kuczynski and Williamson, 2003). The new development strategy has been effective in generating export dynamism, attracting foreign direct investment (FDI) and increasing productivity in leading firms and sectors. In most countries, inflation trends and budget deficits have been effectively brought under control, and confidence in the macroeconomic authorities has increased. Nonetheless, economic growth has been frustratingly low and volatile, and domestic savings and investment have remained depressed. Overall productivity performance has been poor, largely as a result of the growing underutilization of both physical capital and labor. Increasing production and labor market dualism has become one of the most distinctive effects of the reform process, with the expansion of “world class” firms (many of them subsidiaries of multinationals) coinciding with increasing unemployment and labor market informality.


Foreign Direct Investment Total Factor Productivity Real Exchange Rate Production Sector Structural Reform 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Amsden, A. (2001), The Rise of the Rest: Non-Western Economies’ Ascent in World Markets, Oxford University Press, Oxford.CrossRefGoogle Scholar
  2. Cárdenas, E., J. A. Ocampo and R. Thorp (2000) (eds.), Industrialisation and the State in Latin America: the Post War Years, An Economic History of Twentieth Century Latin America, Volume Three, Palgrave Press and St. Martins, New York.Google Scholar
  3. Cimoli, M. and N. Correa (2005), “Trade openness and technological gaps in Latin America: A ‘low growth trap’”, in J. A. Ocampo (ed.) Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability, Stanford University Press/ECLAC, Palo Alto, Ca.Google Scholar
  4. Correa, R. (2002), “Reformas estructurales y crecimiento en América Latina: un análisis de sensibilidad”, CEPAL Review, No. 76, Santiago, April.Google Scholar
  5. Dosi, G., C. Freeman, R. Nelson, G. Silverberg, and L. Soete (1988) (eds.), Technical Change and Economic Theory, Maastricht Economic Research Institute on Innovation and Technology (MERIT)/The International Federation of Institutes for Advanced Studies (IFIAS), Pinter Publishers, London and New York.Google Scholar
  6. ECLAC (Economic Commission for Latin America and the Caribbean) (2003a), A Decade of Light and Shadow: Latin America and the Caribbean in the 1990s, ECLAC Books No. 76, Santiago.Google Scholar
  7. — (Economic Commission for Latin America and the Caribbean) (2003b), Latin America and the Caribbean in the World Economy, 2001–2002 Edition, Santiago.Google Scholar
  8. — (Economic Commission for Latin America and the Caribbean) (2002a) Globalization and Development, Santiago.Google Scholar
  9. — (Economic Commission for Latin America and the Caribbean) (2002b), Growth with Stability: Financing for Development in the New International Context, ECLAC Books, No. 67, Santiago.Google Scholar
  10. — (Economic Commission for Latin America and the Caribbean) (2002c), Latin America and the Caribbean in the World Economy. 2000–2001 Edition, Santiago.Google Scholar
  11. — (Economic Commission for Latin America and the Caribbean) (1998), América Latina y el Caribe: políticas para mejorar la inserción en la economía mundial, Second edition, Fondo de Cultura Económica, Santiago and Mexico City. Also see the English version Latin America and the Caribbean: Policies to Improve Linkages with the Global Economy, United Nations, Santiago, 1995.Google Scholar
  12. Edwards, S. (1995), Crisis and Reform in Latin America: From Despair to Hope, The World Bank, Oxford University Press, Washington, DC.Google Scholar
  13. Escaith, H. and S. Morley (2001), “El efecto de las reformas estructurales en el crecimiento económico de la América Latina y el Caribe. Una estimación empírica”, El Trimestre Económico, Vol. LXVIII (4), No. 272, Mexico, October–December.Google Scholar
  14. Fatás, A. (2002), “The effects of business cycles on growth”, in N. Loayza and R. Soto (eds.), Economic Growth: Sources, Trends and Cycles, Central Bank of Chile, Santiago.Google Scholar
  15. Ffrench-Davis, R. (2003), “Financial crises and national policy issues: An overview”, in R. Ffrench-Davis and S. Griffith-Jones (eds.), From Capital Surges to Drought: Seeking Stability for Emerging Markets, WIDER/CEPAL, Palgrave/Macmillan, London.CrossRefGoogle Scholar
  16. — (2005), Reforming Latin America’s Economies: After Market Fundamentalism, Palgrave Macmillan, London and New York.CrossRefGoogle Scholar
  17. Helleiner, G. K. (1992), (ed.), Trade Policy Industrialization and Development: New Perspectives, Oxford University Press, New York.Google Scholar
  18. Hirschman, A. O. (1958), The Strategy of Economic Development, Yale University Press, New Haven, CT.Google Scholar
  19. Hnatkovska, V. and N. Loayza (2003), “Volatility and growth”, The World Bank, Washington, DC, August.Google Scholar
  20. Hofman, A. (2001), “Long run economic development in Latin America in a comparative perspective: Proximate and ultimate causes”, Serie Macroeconomía del Desarrollo, No. 8, Economic Commission for Latin America and the Caribbean (ECLAC), Santiago, December.Google Scholar
  21. IDB (Inter-American Development Bank) (1997), Latin America After a Decade of Reforms, Economic and Social Progress in Latin America 1997, Washington, DC.Google Scholar
  22. Katz, J. (2001), Structural Reforms, Productivity and Technological Change in Latin America, ECLAC Books, No. 64, Economic Commission for Latin America and the Caribbean (ECLAC), Santiago.Google Scholar
  23. — (1987) “Domestic technology generation in LDCs: a review of research findings”, in J. Katz (ed.), Technology Generation in Latin American Manufacturing Industries, Macmillan, London.Google Scholar
  24. — and B. Kosacoff (2000). “Technological learning, institutional building, and the microeconomics of import substitution”, in Cárdenas, Ocampo and Thorp (2000).Google Scholar
  25. Kuczynski, P. P. and J. Williamson (2003), (eds.), After the Washington Consensus: Restarting Growth and Reform in Latin America, Institute for International Economics, Washington, DC.Google Scholar
  26. Lall, S. (1990), Building Industrial Competitiveness in Developing Countries, OECD Development Center, Paris.Google Scholar
  27. Loayza, N., P. Fajnzylber and C. Calderón (2002), “Economic growth in Latin America and the Caribbean: Stylized facts, explanations, and forecasts”, World Bank, Washington, DC.Google Scholar
  28. Lora, E. and U. Panizza (2002), “Structural reforms in Latin America under scrutiny”. Background paper prepared for the seminar Reforming Reforms, Inter-American Development Bank Annual Meetings, Fortaleza, Brazil.Google Scholar
  29. — and F. Barrera (1998), “El crecimiento económico en América Latina después de una década de reformas estructurales”, Pensamiento Iberoamericano, Madrid, Special issue.Google Scholar
  30. Mortimore, M. and W. Peres (2001), “Corporate competitiveness in Latin America and the Caribbean”, CEPAL Review, No. 74, Santiago, August.Google Scholar
  31. Nelson, R. R. (1996), The Sources of Economic Growth, Harvard University Press, Cambridge, Mass.Google Scholar
  32. — and S. G. Winter (1982), An Evolutionary Theory of Economic Change, The Belknap Press of Harvard University Press, Cambridge, Mass. and London.Google Scholar
  33. Ocampo, J. A. (2005), “The quest for dynamic efficiency: Structural dynamics and economic growth in developing countries”, in J. A. Ocampo (ed.) Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability, Stanford University Press/ECLAC, Palo Alto, Ca.CrossRefGoogle Scholar
  34. — (2003a), “Capital account and counter-cyclical prudential regulations in developing countries”, in R. Ffrench-Davis and S. Griffith-Jones (eds.), From Capital Surges to Drought: Seeking Stability for Emerging Markets, WIDER/ECLAC/Palgrave, London.Google Scholar
  35. — (2003b), “Developing countries’ anti-cyclical policies in a globalized world”, in A. Dutt and J. Ros (eds.) Development Economics and Structuralist Macroeconomics: Essays in Honor of Lance Taylor, Edward Elgar, Aldershot, UK.Google Scholar
  36. — and M. A. Parra (2003), “The terms of trade for commodities in the twentieth century”, CEPAL Review, No. 79, Santiago.Google Scholar
  37. Pérez, C. (2001) “Technological change and opportunities for development as a moving target”, CEPAL Review, No 75, Santiago.Google Scholar
  38. Prebisch, R. (1951), Theoretical and practical problems of economic growth, Economic Commission for Latin America (ECLAC), United Nations publication, Mexico City.Google Scholar
  39. Ramey, G. and V. Ramey (1995), “Cross country evidence on the link between volatility and growth”, American Economic Review, Vol. 85, No. 5, December.Google Scholar
  40. Roberts, M. J. and J. R. Tybout (1996) (eds.), Industrial Evolution in Developing Countries. Micro Patterns of Turnover, Productivity, and Market Structure, Oxford University Press, Oxford.Google Scholar
  41. Rodríguez, F. and D. Rodrik (2001), “Trade policy and economic growth: a skeptic’s guide to the cross-national evidence”, Vol. 15, in S. Bernanke and K. Rogoff (eds.), NBER Macroeconomics Annual 2000, MIT Press, Cambridge, Mass.Google Scholar
  42. Rodrik, D. (1999), Making Openness Work: The New Global Economy and the Developing Countries, Overseas Development Council, Washington, DC.Google Scholar
  43. Ros, J. (2000), Development Theory and the Economics of Growth, The University of Michigan Press, Ann Arbor.Google Scholar
  44. Rosenstein-Rodan, P. N. (1943), “Problems of industrialization of Eastern and South-Eastern Europe”, The Economic Journal, Vol. 53.Google Scholar
  45. Schumpeter, J. (1962), Capitalism, Socialism and Democracy, Third edition, Harper Torch Books, New York.Google Scholar
  46. Stallings, B. and J. Weller (2001), “Employment in Latin America: Cornerstone of social policy”, CEPAL Review, No. 75, Santiago, December.Google Scholar
  47. — and W. Peres (2000), Growth, Employment and Equity: the Impact of the Economic Reforms in Latin America and the Caribbean, The Brookings Institution (ECLAC), Washington, DC.Google Scholar
  48. Stiglitz, J. A. (2003), “Whither reform? Toward a new agenda for Latin America”, CEPAL Review, No. 80, Santiago, August.Google Scholar
  49. Taylor, L. (1991), Income Distribution, Inflation and Growth, The MIT Press, Cambridge.Google Scholar
  50. UNCTAD (1999), Trade and Development Report, 1999 (UNCTAD/TDR/1999), Geneva.Google Scholar
  51. World Bank (2002), From Natural Resources to the Knowledge Economy: Trade and Job Quality, D. De Ferranti, G. E. Perry, D. Lederman, and W. F. Maloney (eds.), World Bank Latin American and Caribbean Studies Viewpoints, Washington, DC.Google Scholar
  52. — (1997), The Long March: A Reform Agenda for Latin America and the Caribbean in the Next Decade, S. J. Burki and G. E. Perry (eds.), World Bank Latin American and Caribbean Studies Viewpoints, Washington, DC.Google Scholar

Copyright information

© Economic Commission for Latin America and the Caribbean 2006

Authors and Affiliations

  • José Antonio Ocampo

There are no affiliations available

Personalised recommendations