The Analysis of ‘Leading Sectors’: A Long term view of 18 Latin American economies

In the 1950s and 60s, in Latin America structuralism was considered as the preeminent form of analysis of economic development and growth. Nowadays, in contrast, as a mode of analysis structuralism is distinctly unfashionable, and has been superceded by newer endogenous growth theories, which build on earlier neoclassical contributions. Beyond broad endorsements of enhancing human capital, promoting infrastructure provision and the importance of sustaining investment levels, it is arguable whether endogenous growth theories been able to shed much light on the dynamics of growth. This paper revindicates the utility of structuralist analysis in the analysis of Latin American growth patterns. Through some simple empirical tests, it explores the relationship between economic growth and structural performance. Using as high a level of disaggregation as the data allows, we use dynamic panel data analysis together with a steady state model to calculate the elasticities of sectoral growth to overall output. The implications for resource allocation and policies to promote particular sectors are discussed.