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Barriers to Growth - In Brief

December 1, 2006


Douglas Clement Editor, The Region
Barriers to Growth - In Brief

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]

Douglas Clement
Editor, The Region

Douglas Clement was a managing editor at the Minneapolis Fed, where he wrote about research conducted by economists and other scholars associated with the Minneapolis Fed and interviewed prominent economists.