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Revisiting the Effect of the Great Liberalization on the Growth of Latin America and the Caribbean, 1980-2010

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  • Merchán, Federico
  • Mesquita Moreira, Mauricio

Abstract

As Latin America and the Caribbeans “Great Liberalization” reaches its 30th anniversary, we revisit the trade and growth debate by updating and expanding Estevadeordal and Taylors 2013 paper. To better understand the regions heterogeneity of policies and outcomes, we extend this analysis to include a larger sample of countries, a new and more disaggregated bilateral product-level tariff dataset; a longer timespan; and a country-sector analysis. The results indicate that liberalization is likely to have made a significant contribution to the acceleration in growth observed in the postliberalization periodan extra 0.6 to 0.7 percentage points on annual per-capita growth-driven by lower tariffs on capital and intermediate goods (as suggested by Solows growth model) and by the manufacturing sector.

Suggested Citation

  • Merchán, Federico & Mesquita Moreira, Mauricio, 2020. "Revisiting the Effect of the Great Liberalization on the Growth of Latin America and the Caribbean, 1980-2010," IDB Publications (Working Papers) 10096, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:10096
    DOI: http://dx.doi.org/10.18235/0002144
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    More about this item

    Keywords

    Trade liberalization; growth; Latin America; intermediate goods; capital goods;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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