Some considerations on capital accumulation, structural change, and innovation in four Latin American economies

José I. Casar, Gabriela Dutrénit and Martín Puchet Anyul

Chapter 9 in Economic Development, Economic Growth and Income Distribution, 2025, pp 168-189 from Edward Elgar Publishing

Abstract: This chapter examines the determinants of development in four major Latin American economies—Argentina, Chile, Brazil, and Mexico—through three core hypotheses drawn from Jaime Ros's analysis of economic growth, institutions, and development. First, it highlights the critical role of capital accumulation, emphasizing that low investment rates, particularly those insufficient to support sustained growth, have constrained productivity gains and limited the region's development potential. Insufficient capital investment hampers both output growth and the increase in the capital–labor ratio necessary for improving aggregate labor productivity. Second, the chapter explores the importance of economies of scale and their relationship to structural transformation as drivers of growth. It argues that these economies have failed to channel resources into sectors with increasing returns to scale, a key factor in promoting long-term development. Third, the chapter underscores the need for state intervention to address growth constraints. Public investment, particularly in research and development (R&D) and innovation, is essential for overcoming development traps and stimulating technological advancement. The findings align with Ros's argument that economic efficiency alone does not guarantee growth. While reforms aimed at enhancing market efficiency have transformed the economic landscape, they have not addressed the deeper constraints on capital accumulation and structural change. The chapter concludes that robust state intervention, backed by sufficient public revenues, is necessary to overcome these barriers and achieve sustained, long-term growth in Latin America.

Keywords: Latin American development; Growth constraints; Capital accumulation; Labor productivity; Economies of scale; Structural transformation (search for similar items in EconPapers)
Date: 2025
ISBN: 9781803929903
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