Publication: Growth Challenges for Latin America: What Has Happened, Why, and How to Reform the Reforms
Date
2009
ISSN
Published
2009
Author(s)
Ffrench-Davis, Ricardo
Abstract
Latin America faces the twin challenges
of achieving economic growth and reducing extreme
inequality. Notwithstanding the heterogeneity among Latin
American countries (LACs), most of them exhibit both: (i)
low average Gross Domestic Product (GDP) growth; and (ii)
increased inequality during the 1980s. This long period
includes the 'lost decade,' when outcomes in both
variables were evidently negative. These negative trends
have persisted since the early 1990s, in the period of
intense reforms under the Washington consensus. The
development gap (difference in GDP per capita or per worker
between rich countries and LACs) and the equity gap have
broadened in this period. The report evaluate: (a) the
macroeconomic environment in which agents make their
decisions (usually in LACs, under an economic activity
operating significantly below potential GDP, with outlier
macro-prices, and fluctuating aggregate demand); (b)
features of financial reforms (usually intensive in
short-term segments and weak financing of risk and long-term
financing), and their implications for capital formation and
the distribution of opportunities in the domestic economy;
(c) features of trade reforms (intensive in resource-based
exports but low total output of tradable); and (d) the
distribution of productivities, which is closely linked to
the narrow space granted for the development of small and
medium enterprises (SMEs).
Citation
“Ffrench-Davis, Ricardo. 2009. Growth Challenges for Latin America: What Has Happened, Why, and How to Reform the Reforms. Commission on Growth and Development Working Paper;No. 51. © World Bank, Washington, DC. http://hdl.handle.net/10986/27757 License: CC BY 3.0 IGO.”