119-149
Growth and Institutions in Latin American Countries: An Experimental Review for the XXI Century
Authors: Rafael Acevedo Rueda, María Lorca Susino

Number of views: 83
Institutions have been widely studied as triggers of economic growth. Latin American countries in the XXI century have shown an increment in State interventionism; nevertheless, the region exhibited an average annual growth rate around 3.31 percent in the first seventeen years. This research is trying to establish the causality between economic freedom, oil-production, and collectivism with economic growth. In this research in progress report we show early results of our experimental design, which demonstrates the importance of these institutions. Using basic statistics on growth, we conclude that countries that reduced their economic freedom experienced an economic growth of about 1.81 percentage points lower than those countries that did not reduce it, at 1% of significance level. On average, our findings suggest that in Latin America during the analyzed timeframe (2001-2017), non-oil producer countries enjoyed an average annual economic growth rate of about 1.14 percentage points higher that the economic growth experienced by oil-producers. Interestingly, more-collectivist countries grew 0.48 percentage points more than less-collectivist. Finally, we estimated a difference-in-differences model using OLS, and generated instruments (Lewbel, 2012; Lewbel, 2018) accounting for country fixed effects, and applied a variety of estimators to determine the effect of economic freedom in these countries. Our results, statistically significant, suggest that Latin American countries that lose economic freedom grow at a lower rate than the rest of the countries