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Cover page Contents
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March - April 2000 | |
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How structural factors can hurt your wallet |
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By ROGER HAMILTON It does not take much of an intuitive leap to conclude that demography, geography and institutions affect the pace of development. But how much?The authors of Development Beyond Economics caution that pinning numbers on the complex effects of these factors can be tricky. But even imprecise statistical results give some sense of their importance. For example, it is estimated that per capita income in developed countries is $10,600 higher than in Latin America. According to econometric analysis performed for the IDB study, nearly all of that difference can be traced to the following structural disadvantages. Geography. Much of Latin America is tropical, access to transportation is limited, and distances to centers of world trade are great—all of which adds to the cost of trade. Demographics. The younger average age of Latin America’s population means that a larger proportion of people are not working and contributing to national revenues. InstitutionsLatin American public institutions are less effective and less transparent than those in developed countries. The resulting inefficiency hobbles economic growth.
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