Latin American Growth in the 21st Century: The 'Commodities Boom' That Wasn't

Produced by: 
Centre for Economic Policy Research
Available from: 
May 2014
Paper author(s): 
David Rosnick
Mark Weisbrot
Globalization - Trade
Macroeconomics - Economic growth - Monetary Policy

Latin America's economic growth rebound in the 2000s is often attributed to a “commodities boom,” which implies that the region’s growth was stimulated by sizable increases in the price of commodity exports. This paper looks at whether the data support such a conclusion. It finds that there is no statistically significant relationship between the increase in the terms of trade (TOT) for Latin American countries and their GDP growth. There is, however, a positive relationship between the TOT increase and an improvement in the current account balance. It may be that this allowed countries to avoid balance of payments crises or constraints.


Research section: 
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