Latin America at a Crossroads: Controversies on Growth, Income Distribution and Structural Change

CSWP 22 (October 2016)

Author Carlos Aguiar de Medeiros and Nicholas Trebat

Keywords Structuralism, profit–led, devaluation, New Developmentalism

JEL O13, O40, E60

This paper discusses the connections established in recent non–neoclassical literature between growth, structural change and income distribution in large developing economies. We argue that though many analyses have the merit of reintroducing income distribution as a factor in economic growth, they rely almost exclusively on macroeconomic theory, and thus ignore the structural changes that have taken place in recent decades and the ways in which structural aspects of an economy (such as resource availability, market size and geopolitical factors) affect policy options and growth. We argue that Latin American countries today face the same challenge that has constrained their development trajectory historically: to diversify their economic structure through new technological capabilities and greater equality and social progress. 

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