The Historical Experience: Growth Accounting

Abstract

The objective of this chapter is to identify and measure the main factors that account for overall economic growth in some small Latin American countries during the post-war period. Growth accounting analysis provides insight into the contribution of factor accumulation and the overall efficiency of the economy to economic growth. We shall follow the approach put forward by Maddison (1991), whose analysis of economic performance is conducted basically at two levels: ‘ultimate’ and ‘proximate’ causes of growth. ‘Ultimate’ causes of economic growth refer to institutions, ideologies, pressure groups, historical accidents and economic policy at the national level. At the same time, positive and negative influences from outside the country are involved. It is rather difficult to quantify these ‘ultimate’ features and legitimate scope for disagreement on what is important remains.