Three Essays on Contemporaneous Latin American *Development
Correa, Rafael Vicente
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https://hdl.handle.net/2142/85507
Description
Title
Three Essays on Contemporaneous Latin American *Development
Author(s)
Correa, Rafael Vicente
Issue Date
2001
Doctoral Committee Chair(s)
Baer, Werner W.
Department of Study
Economics
Discipline
Economics
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Political Science, International Law and Relations
Language
eng
Abstract
Since the mid-1980s, most Latin American countries began an accelerated process of structural reforms in the line of the so-called "Washington Consensus". The first chapter of the dissertation tests the robustness of former evidence showing a positive correlation between the reforms and the Latin-American economic growth or the respective sources of growth. The results are notable. No reform is robustly correlated with the expected sign with growth, investment, or productivity growth, and there is strong econometric evidence that some reforms, and particularly labor deregulation, are harming productivity growth. The results also show positive time effects for the period 1987-1995, contradicting the prevailing wisdom of negative time effects justifying the poor Latin American economic performance despite the many and deep structural reforms. Chapter 2 analyzes the economic desirability of a common currency for the Andean Community of Nations (CAN). The evidence shows that the CAN has not yet created an actual Andean market, and that the volatility of the bilateral exchange rates is a significant factor for this poor result. The evidence also demonstrates that the heterogeneous macroeconomic performance observed between the Andean countries is explained not because idiosyncratic shocks, but rather because of the different size of responses and speed of adjustment to common shocks. Finally, using improved policy indices Chapter 3 evaluates the impact of the structural reforms on the quantity and quality of economic growth in Latin America. Conditional probability analysis shows that high reforms are neither necessary nor sufficient to achieve high growth. In addition, regression analysis reveals no evidence of the reforms being growth enhancing. Further evidence shows that labor deregulation and trade liberalization are negatively correlated with human development growth and the latter is also positively correlated with inequality in the region. Finally, the results show that the unobserved country capabilities computed using panel regressions reflect human development and are independent of the level of structural reforms.
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