The Impact of Structural Reforms on Growth in Latin America and the Caribbean : An Empirical Estimation

This paper presents an evaluation of the impact of structural reforms using data collected for 17 Latin American countries for the period 1970-1996. In line with the literature, the results show that growth was responsive to investment in physical as well as in human capital. Results also strongly support the positive contribution to growth of a stable macroeconomic environment. In the aggregate, the reforms did not have a significant direct impact on the growth rate, because the different individual components of the reform package have offsetting effects. Tax and capital account reforms showed a positive and lasting impact on growth. The other components, in particular trade reform, do not seem to have a robust or significant impact. The speed of reform matters, and the more rapid the process of reform, the slower the growth rate