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Innovation and Inclusion in Latin America pp 1–32Cite as

Palgrave Macmillan

Innovation, Inclusion, and Institutions: East Asian Lessons for Latin America?

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Part of the book series: Studies of the Americas ((STAM))

Abstract

Latin American countries have made substantial progress with respect to some socioeconomic indicators in recent decades. Indeed, many countries in the region now enjoy middle-income status within the international context. This progress was accelerated by the “commodity super-cycle” during the ten years from around 2003 to 2012, as China’s demand for commodities led to price and volume increases for many Latin American exporters of those products. Now the region faces two kinds of challenges. On the one hand, the commodity cycle is over for the foreseeable future, so another kind of strategy must be sought to maintain high growth rates. On the other hand, the commodity boom did not resolve all of Latin America’s socioeconomic problems and may even have exacerbated some of them. Thus, the gap increased between nations, regions, and social groups that benefitted and those that did not. Moreover, productivity failed to rise in line with international trends.

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Notes

  1. 1.

    On the middle-income trap, among others, see Foxley and Sossdorf (2011), Kharas and Kohli (2011), Agenor and Canuto (2012), Paus (2012), Eichengreen et al. (2013), Im and Rosenblatt (2013).

  2. 2.

    A complementary analysis, which focuses on a comparison between Latin America and OECD countries, is OECD (2015).

  3. 3.

    The book was controversial because of disagreement over the relative emphasis on economic fundamentals versus government intervention. A number of rebuttals have been published. See, for example, Amsden (1994), Fishlow et al. (1994), and Stiglitz and Yusuf (2001).

  4. 4.

    The term “newly industrializing countries” (NICs) was initially used. The term NICs has generally been abandoned, however, with the rise of China and the acquiescence of most nations to China’s insistence that Taiwan is not a country, but merely a province of China. A spillover of this political–legal situation is that most international databases do not include Taiwan, which makes comparative analysis difficult. Several chapters, including this one, suffer from this problem, as will be seen.

  5. 5.

    Even during the 1970s, there were important differences in the development strategies of the two regions; see Gereffi and Wyman (1990).

  6. 6.

    A number of publications on technological change, innovation, and productivity in Latin America have appeared in the last few years, testifying to the importance attached to these topics. Several compare Latin America and East Asia. See, for example, ECLAC (2008), Crespi and Zuniga (2010), Pagés (2010), IDB (2011), Crespi et al. (2014), and Lederman et al. (2014).

  7. 7.

    The relationship referred to here is between levels of income and education, which is not controversial. More controversial is the link between income and increase in schooling. Some evidence suggests that the relationship is not significant or even negative; explanations center on measurement error, endogeneity, and quality of education. There is also variation between findings at the micro and macro levels. For a useful review, see Krueger and Lindahl (2001).

  8. 8.

    Knowledge-intensive services are education, health, and business, financial, and communications services. High-technology manufacturing includes aerospace, communications and semi-conductors, computers and office machinery, pharmaceuticals, and scientific instruments. The OECD has taken the lead in establishing categories of products and organizing data collection.

  9. 9.

    High-technology exports are the same categories included in high-technology manufacturing in note 8.

  10. 10.

    The Gini index is one of the most common measures of inequality, where 0 represents perfect equality and 100, perfect inequality. The 20/20 ratio measures the relationship between the income shares of the richest and poorest 20 % of the population. The head count ratios are the shares of the population that live below $2 or $5 per day, standardized at 2005 international prices.

  11. 11.

    For a United Nations Educational, Scientific, and Cultural Organization (UNESCO) study on types of secondary education and the relationship to the labor market in developing countries, see Holsinger (2000).

  12. 12.

    For recent analysis of problems within the Brazilian education system, see Brock and Schwartzman (2004), Kosack (2012: Chap. 6), and Sandoval (2012). An older book that is still relevant is Birdsall and Sabot (1996).

  13. 13.

    PISA is a worldwide study by the OECD in member and non-member nations of 15-year-old school pupils’ scholastic performance on mathematics, science, and reading. Eight Latin American countries participate: Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, and Uruguay. Students from those countries typically rank in the bottom third of the 65 nations that take part. For analysis of the state of education in Latin America, see Ganimian and Solano Rocha (2011), Hanushek and Woessmann (2012), and Fiszbein (2014).

  14. 14.

    There is a vast literature on SMEs and micro firms. The work of the IFC has been pioneering in its comparative and quantitative nature. See, for example, Kushnir et al. (2010). For a useful literature review on SMEs in developing countries, which addresses the relationship with growth, job creation, and income generation, see Kingombe et al. (2010).

  15. 15.

    These are the so-called Worldwide Governance Indicators, developed by Daniel Kaufmann and colleagues at the World Bank (http://info.worldbank.org/governance/wgi/index.aspx#home). There are six indicators; in addition to the four mentioned in the text, they also include regulatory quality and voice and accountability. The indicators, which have been published by the World Bank since 1996, are made up of hundreds of sub-indicators taken from many other studies. The methodology used is explained in Kaufmann et al. (2010). The main critiques are that the measures are based on perceptions rather than actions, adverse selection is involved, and biases are included for and against various policy alternatives that have little to do with governance per se. See, for example, Kurtz and Schrank (2007).

  16. 16.

    See, for example, Kaufmann et al. (2009) as well as their response to Kurtz and Schrank (2007).

  17. 17.

    Kurtz and Schrank (2007) argue that growth brings about an improvement in governance. Ang (2014), in a case study on China, insists that the two “co-evolve.”

  18. 18.

    In addition to Johnson, others who made significant contributions to this literature include Amsden (1989), Wade (1990), and Woo Cumings (1999). Stubbs (2009) wrote a recent review that asks, “What happened to the East Asian developmental state?”

  19. 19.

    Dependent development originated from Peter Evans’ (1979) book by that name.

  20. 20.

    On public–private partnerships, see Devlin and Moguillansky (2009). It is interesting that the IDB, which had been a leader in advocating the withdrawal of the state, has recently decided this process has gone too far. See its latest “flagship” publication (Crespi, Fernández-Arias, and Stein 2014).

  21. 21.

    A comparison of Latin American and East Asian financial systems is found in Stallings with Studart (2006).

  22. 22.

    Both the IDB and the UN Economic Commission for Latin America and the Caribbean (ECLAC) have been working on the topic of production networks or “value chains” as they are also called. The IDB’s work is discussed in Blyde (2014). ECLAC has published two recent books on the topic of value chains (ECLAC 2014; Hernández et al. 2014). An earlier paper that looked at East Asian investments in Latin America from a value chain perspective is Kwak (2012).

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Authors and Affiliations

  1. Watson Institute, Brown University, Providence, Rhode Island, USA

    Barbara Stallings

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  1. Barbara Stallings
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Editors and Affiliations

  1. Cieplan, Santiago, Chile

    Alejandro Foxley

  2. International & Public Affairs, Brown University, Watson Institute of, PROVIDENCE, Rhode Island, USA

    Barbara Stallings

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Stallings, B. (2016). Innovation, Inclusion, and Institutions: East Asian Lessons for Latin America?. In: Foxley, A., Stallings, B. (eds) Innovation and Inclusion in Latin America. Studies of the Americas. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-59682-6_1

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