External challenges to economic growth in Latin America

Juan Carlos Moreno Brid, Esteban Pérez Caldentey, Lorenzo Nalin and Edgar Pérez-Medina

Chapter 7 in Economic Development, Economic Growth and Income Distribution, 2025, pp 125-141 from Edward Elgar Publishing

Abstract: Drawing on the balance-of-payments constrained growth (BPCG) literature, a parsimonious adaptation of the standard BPCG model, recently proposed by the authors, is presented to analyze the short-term dynamics of semi-industrialized economies. The model addresses the impact of sudden changes in export demand and access to international capital flows on these nations’ economic trajectories. It is applied to selected Latin American countries to evaluate the growth challenges arising from global shocks or shifts in key economic policies in developed economies. It identifies growth constraints rooted in financial vulnerabilities and structural fragilities within the productive and trade sectors of these economies. The findings provide insights into the effects of real and financial shocks, as well as abrupt shifts in United States monetary policy, on the short- and medium-term growth trajectories of developing countries, and have implications for macroeconomic policy formulation in Southern economies, aimed at enhancing resilience against externally induced shocks.

Keywords: Balance of payment constraint; Growth model; Current account deficit; Emerging market vulnerabilities; Cross-border flows (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803929903
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