Growth and Adjustment in East Asia and Latin America

Abstract

Growth rates around the world have varied greatly over the last four decades. The four East Asian tigers - Hong Kong, Singapore, South Korea (henceforth Korea), and Taiwan - grew at an average of over 6.0% a year in per capita terms between 1960 and 2000. In contrast, many countries in Latin America and the Caribbean recorded less than 1.0% growth during the same period. Comparing the high growth of East Asian countries with the poor performance of Latin American and Caribbean economies leads to the question of which factors are fundamental for explaining such differences and what countries should do to spur growth. This paper assesses the evolution of growth in these two regions in order to explain the poor performance of Latin America and the Caribbean relative to East Asia.