HAS LATIN-AMERICA POSTREFORM GROWTH BEEN DISAPPOINTING

After years of poor macroeconomic performance, many Latin American cou ntries undertook ambitious programs of macroeconomic stabilization and structural reform during recent years. The change in policy created h igh expectations for the region. Some observers question, however, whe ther actual growth outcomes in several Latin American countries have m easured up to such expectations. This paper offers some evidence that the response of economic growth to reforms in Latin America has not be en disappointing. Because of the significant changes in policies achie ved in Latin America by the 1990s and in spite of the global slowdown, Latin America did well to return to its historic rate of growth of 2 percent per capita in 1991-93. Latin American growth has responded to changes in policy variables as would have been predicted by the experi ence of other times and places, as summarized by a panel regression sp anning a large number of countries and multi-year periods from 1960 to 1993. In order to obtain consistent estimates of the parameters linki ng policy variables and growth, this paper uses a dynamic panel method ology that both controls for unobserved time-and country-specific effe cts and accounts for the likely joint endogeneity of the explanatory v ariables.