The policy roots of socioeconomic stagnation and environmental implosion: Latin America 1950-2000

Abstract

The persistence of growth and its equity and environmental effects heavily depend on the composition of asset investments. Physical, human, and natural capital are the key assets behind the development process. Market failures tend to affect the accumulation of such assets asymmetrically, leading to underinvestment in human and natural capital. Public policy in Latin America has generally exacerbated such market failures by promoting physical capital investments using massive public subsidies instead of relying on the expansion of public and semipublic assets that complement physical capital. The result: economic stagnation, deep social inequities and environmental destruction.