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The Political Economy of Growth in Latin America and East Asia: Some Empirical Evidence

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  • Ludovic Comeau

Abstract

This article examines the historical records of poor economic performance of Latin America compared to East Asia's relative success in the 1970s and 1980s. Although both regions adopted similar postwar protective inward‐oriented development strategies, their experiences and economic outcomes diverged significantly in subsequent years. Some have argued that East Asian countries outperformed Latin American ones because they implemented appropriate policies that were adaptive to changes in the global market scene. This study shows that the respective sociopolitical and institutional environment of the two regions was also an important factor contributing to their economic outcomes. A growth model augmented with policy‐driven and sociopolitical variables is developed. Using data for selected countries in both regions, the results confirm the hypothesis of a negative direct (efficiency) effect of sociopolitical instability on growth, with an additional indirect (accumulation) effect through investment, irrespective of a country's location. Policies adopted by governments, particularly to control inflation and foreign indebtedness and to enhance economic freedom and human capital accumulation, appear crucial for stability. Such policies influenced economic performance through both the direct and the indirect channels. (JEL B25, E13, F43, H19, O57)

Suggested Citation

  • Ludovic Comeau, 2003. "The Political Economy of Growth in Latin America and East Asia: Some Empirical Evidence," Contemporary Economic Policy, Western Economic Association International, vol. 21(4), pages 476-489, October.
    • Handle: RePEc:bla:coecpo:v:21:y:2003:i:4:p:476-489
    DOI: 10.1093/cep/byg026
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    Cited by:

    1. Samuel Kyle Jones & Michael Stroup, 2010. "Closed-end country fund premiums and economic freedom," Applied Financial Economics, Taylor & Francis Journals, vol. 20(21), pages 1639-1649.
    2. Prakash Kumar Shrestha Ph.D., 2013. "A Revisit of the East Asian Development Experiences in the Context of South Asia," NRB Working Paper 18/2013, Nepal Rastra Bank, Research Department.
    3. Murat Ungor, 2017. "Productivity Growth and Labor Reallocation: Latin America versus East Asia," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 25-42, March.
    4. Elita Mora & Irene Vicente & Patricia Villegas & Rafael Alvarado, 2017. "Relación entre el capital humano y el producto en Ecuador: el rol de las políticas educativas," Economic Analysis Working Papers (2002-2010). Atlantic Review of Economics (2011-2016), Colexio de Economistas de A Coruña, Spain and Fundación Una Galicia Moderna, vol. 1, pages 1-1, June.
    5. Zeeshan, Muhammad & han, Jiabin & Rehman, Alam & Ullah, Irfan & Hussain, Arif & Alam Afridi, Fakhr E., 2022. "Exploring symmetric and asymmetric nexus between corruption, political instability, natural resources and economic growth in the context of Pakistan," Resources Policy, Elsevier, vol. 78(C).
    6. Behrooz Gharleghi & Najla Shafighi, 2020. "Do regional trade agreements increase trade? Empirical evidence from the Asia–Pacific region," Economic Affairs, Wiley Blackwell, vol. 40(3), pages 419-435, October.
    7. repec:nrb:wpaper:nrbwp182013 is not listed on IDEAS
    8. Doucouliagos, Chris & Ulubasoglu, Mehmet Ali, 2006. "Economic freedom and economic growth: Does specification make a difference?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 60-81, March.
    9. Prakash Kumar Shrestha, 2013. "Economic development in South and East Asia: empirical examination of East Asian Development Model," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 20(2), pages 1-28, December.
    10. Dengjun Zhang, 2022. "Capacity utilization under credit constraints: A firm‐level study of Latin American manufacturing," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1367-1386, January.
    11. George R. Crowley & John A. Dove & Daniel Sutter, 2017. "Voter Preferences, Institutions, And Economic Freedom," Contemporary Economic Policy, Western Economic Association International, vol. 35(1), pages 76-92, January.
    12. Awad, Atif & Albaity, Mohamed, 2022. "ICT and economic growth in Sub-Saharan Africa: Transmission channels and effects," Telecommunications Policy, Elsevier, vol. 46(8).
    13. Beatriz Barrado & Gregorio Gimenez & Jaime Sanaú, 2021. "The Use of Decomposition Methods to Understand the Economic Growth Gap between Latin America and East Asia," Sustainability, MDPI, vol. 13(12), pages 1-18, June.

    More about this item

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H19 - Public Economics - - Structure and Scope of Government - - - Other
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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