Vanishing Growth in Latin America

Vanishing Growth in Latin America

The Late Twentieth Century Experience

Edited by Andrés Solimano

Economic growth in Latin America and the rise of material welfare has lagged behind that of more dynamic areas of the world economy. In a region prone to policy experiments, the policies of the Washington Consensus applied since the 1990s failed to bring sustained growth to most of Latin America. Andrés Solimano and an impressive set of contributors analyze the last 40 years in order to determine the role of economic reforms, external conditions, factor accumulation, income inequality, political instability and productivity in explaining GDP increases. The book also looks at cycles of growth, identifying periods of rapid growth and contrasting them with periods of stagnation and collapse.

Chapter 4: Economic Growth in the Andean Region: The Role of Economic and Governance Factors

Claudio Aravena, André A. Hofman and Andrés Solimano

Subjects: development studies, development economics, economics and finance, development economics, regional economics


* Claudio Aravena, André A. Hofman and Andrés Solimano 4.1 INTRODUCTION This chapter analyzes the growth performance of Bolivia, Colombia, Ecuador, Peru and Venezuela – the so-called Andean region – in the last decades of the twentieth century. Economic growth is a main vehicle to improve living standards, reduce poverty and provide resources to the state for the financing of social policy. The Andean countries are a diverse group in terms of economic characteristics, policies and socio-political conditions. Several Andean countries exhibited in the last three decades high indices of Presidential crises, regime changes and above average frequencies of constitutional changes (see Solimano, 2003 and 2005). Growth in the Andean region has to be understood in a context of chronic political instability, and governance problems that have characterized this region. In terms of natural resource endowments Venezuela and Ecuador are oil exporters while Bolivia, Peru and Colombia are net oil importers. Ethnic diversity is far greater in Peru, Bolivia and Ecuador than in Colombia and Venezuela. Colombia was, historically, a country of mild growth cycles and prudent macroeconomic management, although a deterioration of economic conditions started in the mid-1990s. Ecuador experienced very rapid rates of economic growth in the 1970s led by the oil sector but fell down into a protracted period of sluggish economic growth and macroeconomic instability in the 1980s and 1990s. This culminated with a severe economic and financial crisis in 1998–99. In 2000 the country officially dollarized the economy, starting a process of stabilization and resumption...

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