This document determines the severity of the specialization pattern constraint on economic growth in Latin America for the period 1950-2016. For this purpose, Thirlwall’s Law is estimated with the help of cointegration with structural break and time-varying parameter techniques. The results compel the conclusion that the specialization pattern has constrained economic growth in Latin America for the whole period, but the constraint has tightened severely during economic liberalization. Since results suggest that Latin America is stuck in a trap of falling-behind growth due to the specialization pattern, Thirlwall’s Paradox is explored in a model that incorporates changes in productivity and reallocation of labor to analyze the conditions that allow investment to increase growth
The International Crisis and Latin America: Growth Effects and Development Strategies
