The Region

Barriers to Growth - In Brief

Douglas Clement - Editor, The Region

Published December 1, 2006  |  December 2006 issue

Breaking barriers

Why have Latin American economies lagged countries with similar ability to adopt technologies and similar preferences for market goods?

Four economists document this "persistent economic stagnation" and analyze it through a neoclassical growth model. Capital, labor and total factor productivity are potential explanations, according to this model, and the economists narrow it to the last: TFP, "the efficiency with which an economy uses its capital and labor services."

Why have Latin American countries been persistently inefficient? Because of barriers to competition, suggest the economists, who show that when barriers were eliminated in Latin America, productivity and output climbed significantly.

Barriers to Growth [complete article]

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