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Reform and Growth in Latin America: All Pain, No Gain?

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  • Fernandez-Arias, Eduardo
  • Montiel, Peter

Abstract

This paper addresses the adequacy of post-reform growth in Latin America in the 1990s on the basis of international comparisons as well as historical and other relevant standards, analytically exploring and empirically testing a number of hypotheses to explain the perceived dissatisfaction with growth performance in the region. We find that there is no "growth puzzle" in Latin America. Growth has not been higher in the post-reform period not because of a failure of reforms to yield the growth payoff that they should have been expected to do on the basis of international experience, but because of the combination of an unfavorable external environment with insufficient depth and breadth of reform. We also estimate the long-run growth payoff of macroeconomic reforms, the additional gains that can be achieved by deepening this first generation of reforms, and the potential payoff from broadening the scope of reform into a second generation of reforms encompassing deeper structural and institutional areas.
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Suggested Citation

  • Fernandez-Arias, Eduardo & Montiel, Peter, 1997. "Reform and Growth in Latin America: All Pain, No Gain?," Working Papers 244236, Inter-American Development Bank.
    • Handle: RePEc:ags:iadbwp:244236
    DOI: 10.22004/ag.econ.244236
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    More about this item

    Keywords

    International Development;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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