Technological Capabilities Asymmetries in Latin American and the Caribbean

Abstract

This paper analyzes the convergence process in Latin America and the Caribbean during the 1960-2005 period. The evidence is not favorable to clear convergence or divergence trends, but to a slight process of convergence until the 1970s, and then global divergence. In turn, the results suggest the existence of transitory clubs of convergence during the 1960-1974 and 1990-1994 periods. After that, the lower income economies showed convergence to the relative richer countries, but in a context of increasing dispersion of the per capita income. The development accounting and the decomposition of the total factor productivity (TFP) indicate that those results are mainly explained by relative differences in the technological capabilities, and that the existence of structural differences is a key factor to explain the nonconvergence in technological capabilities. The efforts to integrate the economies were not enough to reduce the gap but the divergence in technological capabilities would have been worst without the integration process.Convergence; Total Factor Productivity Decomposition; Technological Capabilities; Economic Integration; Latin American and the Caribbean