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Missed Opportunities: Innovation and Resource-Based Growth in Latin America
- Economía
- Brookings Institution Press
- Volume 3, Number 1, Fall 2002
- pp. 111-150
- 10.1353/eco.2002.0019
- Article
- Additional Information
Economia 3.1 (2002) 111-167
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Missed Opportunities:
Innovation and Resource-Based Growth in Latin America
William F. Maloney
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The twentieth century offered opportunities for rapid resource-based growth that Latin America systematically missed. Even if it were clear that resource-abundant countries have, on average, experienced relatively slow growth, the more interesting question is why some—Australia, Canada, and the nations of Scandinavia, for example—developed successfully while others did not. 1 This paper argues that the causes of Latin America's underperformance and acute sense of dependency can be found in barriers, with deep historical roots, to technological adoption and innovation. The most important was and remains deficient [End Page 111] national "learning capacity," exacerbated in the postwar period by the perverse incentives of inward-looking development policies.
Concerns that resource-based sectors intrinsically lack dynamism have probably been exaggerated. 2 Even in Prebisch's era, future Nobel Prize winner Douglass North argued that "the contention that regions must industrialize in order to continue to grow . . . [is] based on some fundamental misconceptions," while the pioneer trade economist Jacob Viner held that "there are no inherent advantages of manufacturing over agriculture." 3 Viner's claim is supported by estimates that total factor productivity (TFP) growth, which explains roughly half of the differences in the growth of per capita gross domestic product (GDP), was roughly twice as high in agriculture as in manufacturing globally from 1967 to 1992. 4 Blomström and Kokko argue that forestry will remain a dynamic sector in Sweden and Finland, where rapid productivity growth ensures competitiveness relative to emerging low-wage producers. 5 Wright draws on the early experiences of the United States and Australia to demonstrate that the stock of minerals is, to an important degree, endogenous, and major increases in productivity can be realized in discovery and exploitation. 6 More generally, the literature clearly indicates that these development successes based their growth on natural resources, and by Leamer's measure of resource abundance, several still do (see figure 1). 7