Saturday, May 10, 2014

Latin American Growth

Here is an analysis from the Brookings Institution about how to get fast growth in Latin America to return. Curiously, it does not mention the most important reason for the huge growth rates we saw in a number of countries, namely commodities. I don't exactly disagree with his concerns about informality and other problems, but they stem from the deeply entrenched dependence on primary products.

There is a strong connection to change in commodity prices and changes in GDP in Latin America. It's fine to talk about fiscal policy and productivity but ultimately you have to look at what exactly you're producing. The closer your economy looks to a century ago, the worse off you'll be. Focus on that part (and no, I don't pretend it is somehow simple) and the rest will fall into place.


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