-Too much government involvement in the economy, not enough outward market orientation -replace foreign imports with domestic production -reduce foreign dependency by producing more local industrial products
Too little government involvement in the economy. too much outward, market orientation
weak property rights, insufficient rule of law, corruption, and a bureaucratic state are structrual impediments to sustained economic growth
Why did development stall?
Bad policies, bad institutions, commodity dependence, colonial histories
-Commodity producing countries faced with terms of trade losses that hinder development
-volatile commodity prices lead to falling incomes relative to manufacturing oriented economies
-Extractive nature of early colonial settlements discouraged strong institutional development
-Path-dependent effect on development
Why has Latin America outperformed?
Good policies, good institutions, commodity booms
macroeconomic discipline and budgetary surpluses provided the flexibility to spend during economic downturns
stronger, more representative institutions have led to greater social spending targeted toward those most in need (Eg conditional cash transfers)
Terms of trade gains from booming commodity industries has padded government coffers (allowing for the expansion of social spending) and boosted economic growth