6 - Growth, Industrialization and Economic Structure: Latin America and East Asia Compared

Summary

The purpose of this paper is to explore the similarities and differences between a set of very successful countries on the Pacific rim of East Asia and a group of Latin American countries which, by reputation at least, have not fared so well. As I can claim no expertise at all in the East Asia region, and as my knowledge of Latin America derives not from being a student of the area but an economist who has found himself repeatedly in the area working on an assorted set of problems, I will draw heavily on my favourite sources of international data, International Financial Statistics (IMF, various years) and the World Development Report (World Bank, various years). These data provide as much comparability across countries as I can hope for.

The paper begins with a sort of guided tour of what the International Financial Statistics and the World Development Report can tell us about the differences and similarities among the countries covered. Broadly speaking, the differences are probably smaller than is commonly perceived, but none the less the Latin American countries fall short of their Asian counterparts in a number of respects. They seem to be systematically prone to higher rates of inflation, and in recent years at least they have been outstripped by the capacity of the Pacific rim countries for capital formation. Beyond these relatively crude comparisons there is some slightly more subtle evidence of policy performance: three policy indicators that show quite similar performance most of the time, with deviations from similarity that more often reflect policy weakness in the Latin American cases while tending to show notable resistance to temptations by the Asian countries.