The Theoretical Interpretation of Latin American Economic Development

Ideally, a paper such as this one should be a body of generalizations based on the kind of study Svennilson has made of the European economy.2 This was out of the question. I have, therefore, had to take the liberty of reducing the scope of the assignment. After a brief review of recent Latin American growth (Section II), and some general remarks on the basic factors which have determined the ability of the Latin American countries to undergo the structural economic change made necessary by growth (Section III), there are presented a few ideas (Sections IV-V) on three somewhat unique aspects of Latin American growth which appear to be of some historical interest and to have received far less attention than they merit. These three aspects are: first, the way in which growth appears to have been stimulated by shocks; second, the rôle which regional and social inequalities appear to have played in the Latin American growth process; and third, the entirely unorthodox way in which inflation has been connected with growth in Latin America. The first and third of these factors appear to have operated in part through a common mechanism. Where they have promoted growth, they have done so by promoting structural disequilibrium. On a non-technical definition of imbalance which would include the second case as well, imbalance seems to be an interesting part of the explanation of the successful economic development of important Latin American countries in a short period from quite low levels of average income. Implicitly, at least, this paper takes issue with that school of thought which believes that satisfactory growth in the earliest stages of development can come about under all circumstances only if adequate balance is assured between the various parts of the growing economy.