Andrés Solimano Regional Adviser ECLAC, United Nations Paris - July 11th, 2006 VANISHING GROWTH IN LATIN AMERICA OECD SEMINAR

2 THEMES A.Growth performance of Latin America in comparative perspective. B.Individual country performance. C.Volatility and growth crises. D.Determinants of growth: Factor accumulation and TFP. E.Conclusions

3 A. GROWTH PERFORMANCE OF LATIN AMERICA IN COMPARATIVE PERSPECTIVE

4 Figure 1: GDP per capita (PPP) for Latin America, OECD (High Income Countries), the USA and the World Source: World Bank, WDI online database. OECD High Income Countries includes 24 nations. PPP: Purchasing Power Parity.

5 Figure 2. Evolution of the GDP per capita (PPP) of Latin America, East Asia & Pacific and Sub Saharan Africa (as percent of the per capita income of the USA) Latin America East Asia & Pacific Sub Saharan Africa 2004 Source: World Bank, WDI online database. OECD High Income Countries includes 24 nations. PPP: Purchasing Power Parity.

6 Table 1: GDP per capita in Latin America, OECD (High Income Countries), the USA and the World Source: World Bank, WDI online database. OECD High Income Countries includes 24 nations. PPP: Purchasing Power Parity.

7 B. INDIVIDUAL COUNTRY PERFORMANCE

8 Chile and the Dominican Republic accelerated their historical growth rate since the mid to late 1980’s. Brazil and Mexico have experienced a growth slowdown in the last 25 years. Argentina and Venezuela, recent recovery.

9 Figure 3. Evolution of GDP per capita: Selected countries of Latin America 2004 Source: World Bank, WDI online database. OECD High Income Countries includes 24 nations. PPP: Purchasing Power Parity.

10 Figure 4. Evolution of GDP per capita (PPP): Selected countries from Latin America and outside the region 2004 Source: World Bank, WDI online database. OECD High Income Countries includes 24 nations. PPP: Purchasing Power Parity.

11 Figure 5. GDP per capita divergence: Venezuela, Singapore and Ireland, (in constant international US$ 2000) 2004 Source: World Bank, WDI online database. OECD High Income Countries includes 24 nations. PPP: Purchasing Power Parity.

12 Figure 6. Other cases of divergence: Spain, Argentina and Italy, (in constant international US$ 2000) Note: GDP per capita (PPP) is measured in constant International dollars of Source : World Bank, WDI online database 2004

13 C. VOLATILITY AND GROWTH CRISES

14 Table 2. Growth Crises in Latin America and Reference Group Source: Solimano, A. (2006). Vanishing Growth in Latin America. The Late Twentieth Century Experience. Edward Elgar Publishers.

15 Figure 7. Latin America and the Caribbean*: Anual GDP growth histogram and cumulative density of GDP growth (*) includes 12 countries. Source: Andrés Solimano (editor), Vanishing Growth in Latin America. The Experience of the Late 20th Century, Edward Elgar Publishing. 0%

16 D. DETERMINATS OF GROWTH: FACTOR ACCUMULATION AND TFP

17 Table 3. Growth accounting for Latin America Source: Solimano, A. (2006). Vanishing Growth in Latin America. The Late Twentieth Century Experience. Edward Elgar Publishers.

18 Table 4. Private and public investment in Latin America (as percentage of GDP) Source: Solimano, A. (2006). Vanishing Growth in Latin America. The Late Twentieth Century Experience. Edward Elgar Publishers.

19 Table 5. Correlation of TFP growth and other variables in Latin American countries * Statistically significant at 90% ** Statistically significant at 95% Source: Solimano, A. (2006). Vanishing Growth in Latin America. The Late Twentieth Century Experience. Edward Elgar Publishers.

20 Table 6. TFP growth and determinants in Latin America

21 Latin America has lost ground in economic growth compared to the United States and Asia in the last decades. In the last 20 to 30 years there has been differences in economic growth inside the region. - Growth acceleration (Chile, Dominican Republic) - Growth deceleration (Brazil, Mexico) - Growth volatility (Argentina, Venezuela) 5. CONCLUSIONS

22 Income per capita convergence and divergence on different “starting” levels. Divergence in per capita income levels is a serious problem. Factors explaining success in economic growth: - Economic reforms and political stability in democracy (Chile) - Opening to foreign investments and technologies (Ireland, China) - Maquila, tourism, immigrants remittances (Dominican Republic) - Other Factors 5. CONCLUSIONS (CONTINUATION)

Andrés Solimano Regional Adviser ECLAC, United Nations Paris - July 11th, 2006 VANISHING GROWTH IN LATIN AMERICA OECD SEMINAR