Latin America's Gramscian moment: when the old fades (“Extractivism”), but the new fails to be born*

José Gabriel Palma

Chapter 3 in The Elgar Companion to the Economies of Latin America and the Caribbean, 2025, pp 68-118 from Edward Elgar Publishing

Abstract: Krugman identified the enigma of Latin America's underperformance as one of the greatest challenges of economic theory. This chapter analyses its “trilogy of contrasts”: i) employment creation in services ranks top in the world; ii) but investment and productivity growth ranks bottom; and iii) the income-share of the top remains among the highest in the world. Basically, its current productive strategies―“extractivism” in commodity-rich countries, assembly platform in the north―have run their course. What's needed is to reinvigorate them with new engines of productivity growth, like start processing commodities and “anchoring” assembly operations in the domestic economy, plus a “green new deal.” Trying to stretch the “shelf-life” of the old ones is a recipe for falling into the middle-income trap―as “more of the same” is no longer a valid productivity growth option. But rigidities and market distortions (home and abroad) are blocking the “upgrade” of these exhausted productive strategies.

Keywords: Latin America; Rentier elites; “Extractivism”; Middle-income trap; Neo-liberalism; Emerging Asia (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035317196
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