LATIN AMERICA. UNDERLYING TRENDS AND POSSIBLE INTERPRETATIONS

After 30 years (1950-1980) of rapid growth and catching-up, Latin America labor productivity stopped growing at the beginning of the ‘80s. Over the last four decades, GDP growth (very slow, indeed) was exclusively realized through the expansion of employment in low-wage and low-productivity sectors (essentially, services and construction). Needless to say, in such a framework significant improvement in income and wealth distribution cannot take place. In this essay, I indicate two factors as key obstacles to Latin American recovery. First, the external constraint imposed by China and its strong preference for imports of unprocessed raw materials. Second, the internal constraint imposed by local élites and rentiers, who have a very strong interest in putting their resources into low value-added sectors. Overcoming these constraints is extremely complicated. Yet, many lessons can be learnt from emerging Asian economies and the pragmatic approach they followed in dealing with their own élites.