ABSTRACT
Latin American academics and government officials are currently expressing an increasing degree of uneasiness with the outcome of market-oriented structural reforms implemented throughout the 1990s. Such reforms were introduced with the purpose of exposing the local production structure to the discipline of international competition, in the hope that this would induce a faster rate of innovation and technical progress, and a higher degree of international competitiveness. The results so far have been disappointing. The relative productivity gap that separates the economies of the region from the international productivity frontier has narrowed in only a few countries and, in just a small number of activities, mostly non-tradables, highly protected industries – as, for example, the automobile industry – or natural resource processing industries and ‘maquila’-type assembly sector, in which domestic value added is dramatically low. Large enterprises – domestic subsidiaries of MNCs or locally-owned conglomerates – have attained the largest in terms of productivity growth, while SMEs have clearly lagged behind (Katz 2001).
