Differences in Long Run Growth Path Between Latin American and Developed Countries: Empirical Evidences

Comparing the long run growth paths between regions of Latin American countries and developed countries is the main focus of this paper. Exogenous and endogenous growth models provide the theoretical background. Simulations of growth rates for developing and selected developed countries are made based upon explanatory variables, using the US as the benchmark. Data for the period 1950-1992 were applied to suitable econometric models – polynomial distributed lag, simultaneous equations – where estimates showed with confidence and accuracy that: 1) In all economies, simulations have proved that human capital and, consequently, technological improvement in the economy as an engine of growth are the responsible factors for generating increasing returns to scale to accelerate the rate of growth; 2) Brazilian growth is the most sensitive to technological change, compared to other regions of Latin American Countries; 3) There is no unique growth policy for the developing economies, but improvement of productivity is common to all of them although at different rates; 4) Political and institutional factors seem to play an important role to explain the growth gap between developed and developing countries