ABSTRACT
Latin American exports are growing rapidly and becoming steadily more diversified, and such diversification is associated with significant economic growth. On some accounts, Latin America is a collection of Newcastles, all full of coal, and so regional integration is unlikely to be profitable. The manufactures increasingly traded within Latin America may represent true gains from trade based on product differentiation. One would expect that in the international division of labor in the production of differentiated manufactures, Latin American countries would at least produce some varieties consistent with their economic size. The presence of slow phaseouts in agriculture means that potential increases in intra-Latin agricultural trade are in fact suppressed by a continuation of former protectionist policies. Latin American domestic savings rates have been chronically low by world standards, and the region has required steady infusions of both portfolio and direct-investment capital in order to finance capital accumulation.
