Essays on economic growth

This dissertation studies several aspects of the growth experience of some Latin American and OECD countries. In 1960 both groups of countries enjoyed an average output per worker of about 0.35 of the US output. By 1990, however, the OECD countries had succeeded to close the gap to 0.71 of US output, whereas the Latin American ones displayed an average output per worker of 0.30 of that of the US. Chapter 2 analyzes the determinants of output over this particular growth episode. The framework of analysis is a growth model with physical and human capital accumulation as advanced in Santos (2000). In this model, investments in these factors are quality adjusted. Once data series for the stocks of physical and human capital have been constructed, a growth accounting exercise is performed. This exercise shows that the level of output of a country can be explained by the stocks of physical and human capital. In particular, most Latin American countries display low rates of investment in physical goods and low relative efforts to human capital accumulation. Chapter 3 examines empirically some of the determinants of the relative price of investment goods in these countries. Total investment is disaggregated into two categories, equipment and structures. The selected explanatory variables affect much more the relative price of equipment goods than the relative price of structures. An important conclusion is that the stock of human capital plays a very important role in lowering the relative price of investment goods, specially of equipment. In Chapter 4 an empirical investigation of the determinants of investment in physical capital is carried out. Total investment is disaggregated as in Chapter 3. It was found that corruption affects negatively and significantly investment in structures, but the effect is not robust when we consider investment in equipment. Another important finding is that, for some variables, neither the level nor the growth rate impacts in vestment rates, and yet the variance is a good explanatory variable. This suggests that uncertainty may play a major role in affecting investment decisions.