Resource Endowments and the Real Exchange Rate: A Comparison of Latin America and East Asia
in Changes in Exchange Rates in Rapidly Development Countries
Theory, Practice, and Policy Issues (One of the most important puzzles of economic development is the postwar failure of Latin American economic growth in comparison with the dramatic growth in East Asia. Table 5.1 shows the per capita growth performance of several key countries in each region for the extended period from 1870 to 1990. The table highlights a striking fact: the relative growth performance of the two regions in the most recent period, 1960-90, is the reverse of the relative growth performance in the preceding period, 1870-1960. Even the recent Asian financial crisis is unlikely to reverse the long-term difference in growth since 1960. The reversal in relative growth performance over the course of a century should caution us immediately against simplistic theories ascribing Asia’s successes, or Latin America’s failures, to ostensibly stable social charac- teristics such as family structure, attitudes toward education, social trust, reli- gion, or attitudes toward authority, which are frequently invoked to explain the differential growth performance of the two regions (though less so since Asia’s financial crisis exploded in 1997!).