Due to several policy distortions, including import-substitution industrialization, widespread government intervention and both domestic and international competitive barriers, there has been a general presumption that Latin America has been much less productive than the leading economies in the...

This paper argues that trade specialization played an indispensable role in supporting the Industrial Revolution, allowing the economy to shift resources to the manufacture without facing food and raw materials shortage. In our arti cial economy, there are two sectors agriculture and manufacture...