Chapter 6: Changing Growth Constraints in Northern Latin America
Jaime Ros* 6.1 INTRODUCTION The 1990s brought promising signs for the economies of Mexico and Central America, a region that had been plagued by political instability and economic setbacks in the 1980s. Macroeconomic stabilization was achieved, the end of civil strife in several countries translated into a positive shock for the region and economic growth resumed at a faster rate than in the rest of Latin America, at least in the countries with highest per capita incomes in the region. The recovery has fallen, however, short of the mark. Economic growth since 1990 has tended to be slower than it had been in the 1960s and 1970s, especially in the case of Mexico with the largest economy in the region. Long-standing growth constraints are far from being eliminated in a region where (with the exception of Mexico) all the relevant factors conspire against growth: small economies, lagging competitiveness, dependence on a few commodity exports that have highly volatile prices and a highly concentrated pattern of income distribution compounded by ethnic inequalities, not to mention high exposure to natural disasters. At the same time, new problems that have emerged with the structural transformation of the past two decades also contribute to prevent a more vigorous pace of economic growth. This chapter examines the stylized facts, current constraints and the prospects of the growth process in Mexico and Central America. Despite the evident heterogeneity of the region with respect to the size of its economies and levels of economic development, these countries...
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