Economic growth in Latin America: the role of investment and other growth sources
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This research produced evidence about the contribution of investment and other sources to the growth process of Latin America during 1960-2002, and provided answers to the questions listed above unless from an historical perspective. The combined growth accounting and regression analysis, and used data for the six largest Latin American countries: Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela. These countries produce nearly 90 per cent of Latin America's GDP. Alternative growth accounting methodologies were used to measure the contributions of the sources of growth to GDP growth during 1960-2002. The study also provides evidence of the effects of investments in machinery and equipment and construction structures, and the effects of private and public investment on per capita GDP growth. The research found evidence of the primary role played by total factor productivity in explaining the difference between fast and slow growth experiences. Extending the traditional growth accounting approach did not change this conclusion. It also found that investment in machinery and equipment, and private investment were most effective in raising per capita GDP growth, but that key policy related variables, including education, were essential ingredients contributing to per capita GDP growth. Evidence of mutual causality between private investment and growth, and inconclusive evidence regarding the incidence of FDI and infrastructure on private investment were also found in this research.