Latin America in the Rearview Mirror

Various short-run crises-exchange rate crises, debt crises, inflation crises, balance-of-payment crises, financial crises-have dominated recent macroeconomic research about Latin America.This literature focuses on the causes of these crises and their short-run impact on macroeconomic fluctuations, taking the trend paths of macroeconomic variables as exogenous.Systematic analyses of Latin American macroeconomic trends have received much less attention.1 This article presents a comparative analysis of Latin American macroeconomic trends over the last 50 years using a neoclassical growth framework.We first compare long-run Latin American macroeconomic performance to that in a number of other countries to provide a benchmark for what Latin America could have reasonably achieved.We make two sets of comparisons.We compare Latin America's long-run performance to that in a peer group of other Western market economies-the other countries with a large fraction of citizens of Western European descent.This comparison shows that all Western countries-including those with initial income levels reasonably similar to those in Latin America in 1950-have made substantial progress in catching up to the United States.In sharp contrast, no Latin American country has made any significant progress in catching up to the United States.