Total factor productivity, transitional dynamics and endogenous growth accounting for Latin America: Evidence from two centuries’ data

This study investigates the sources of economic growth for Latin American economies using two centuries of data and extended growth accounting methods. It shows that poor total factor productivity (TFP) growth is key to understanding Latin America's low economic growth relative to other economies. Using a functional form of TFP growth based on second-generation growth models, the analysis shows some empirical evidence for growth induced by R&D, knowledge spillovers, educational attainment, and distance to the frontier. However, the magnitude effect is minimal and when compared to the OECD countries, the gap between the TFP growth-generating factors is very substantial.