Growth and External Debt: A New Perspective on the African and Latin American Tragedies

Daniel Cohen

No 1753, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper addresses two puzzles of the growth literature: the failure of standard growth equations to account for slow growth in Latin America and Africa; and the surprising failure of trade to explain growth when trade liberalization appears to play a significant role. The paper shows that: i) African growth is readily explained by macroeconomic mismanagement and low investment; ii) trade liberalization should be taken as a proxy for good ‘macroeconomic’ management rather than a genuine measure of the effect of trade upon growth; and iii) poor growth in Latin America (which does not seem to be explained by the preceding feature) is explained well by a variable (constructed in the text) representing the likelihood of debt crisis.

Keywords: Economic Growth; External Debt; trade liberalisation (search for similar items in EconPapers)
JEL-codes: F34 (search for similar items in EconPapers)
Date: 1997-12
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Citations: View citations in EconPapers (36)

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Working Paper: Growth and external debt: a new perspective on the african and latin american tragedies (1997)
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