ABSTRACT
This chapter examines the specialization/structural change/growth relationship using a larger sample of eighteen Latin American countries, and updating our measures of diversification and structural change through 1995. The empirical framework is of the standard type used for examining the properties of the neoclassical growth model, using an appropriate panel data estimator which allows for country-specific differences in labor productivity. The chapter finds evidence for significant differences between regional production functions. Intra-regional convergence of income is stronger in Latin America than in either sub-Saharan Africa or developing Asia. The average rate of structural change in export composition in Latin America has undergone long swings, on the order of 20-25 years from peak to trough, with significant differences among countries. The potential effect of export diversification on economic growth appears large enough to account for a good portion of differences in cross-country growth performance in the region.
