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Why Does Latin America Underperform?

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Why Does Latin America Underperform?

G30,

5 min read
3 take-aways
Audio & text

What's inside?

For many reasons, Latin America’s economies continue their lackluster performance.

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Editorial Rating

8

Qualities

  • Comprehensive
  • Eye Opening
  • For Experts

Recommendation

Latin American economies’ failure to converge with the performance of more developed economies is due to a complex set of circumstances, concludes this authoritative report from the Group of Thirty nations. Latin America is not a geopolitical or macroeconomic monolith, but flawed governance, misallocation of resources, and ineffective fiscal and monetary policies contribute to every Latin American government’s economic malaise. Thus policy responses must align with the specific conditions in each country. Investors and executives with an interest in the region will find this an important reference work.

Summary

The COVID-19 pandemic exposed the many problems afflicting Latin America’s economies.

Since 2013, both headline and trend growth have contracted in Latin America. The commodity boom that had long sustained the area’s economies will likely not continue, due to a decline in Chinese demand. Low productivity, insufficient domestic saving and a reliance on precarious overseas money – which can vanish in response to changes in global macroeconomic conditions – plague these economies. Inefficient resource allocation and a dearth of fungible skills and knowledge forestall a more varied export market, resulting in subpar growth.

Against this backdrop, the impact of the coronavirus on the region was extreme. Most countries failed to stop the proliferation of the virus. Preexisting health conditions, multigenerational cohabitation, a less educated workforce, and informal...

About the Author

The Group of Thirty is a global organization that seeks to broaden understanding of economics and finance.

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