Skip to content Lack of Human Capital is Holding Back Latin America’s Growth

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Since Asia has twice the investment level of Latin America, it is tempting to blame low growth on low investment.

Productivity growth, human capital, and institutionsIn the long run, it is not more input (labor and capital) that generates growth, but productivity (how much more output can be produced with the same input) in the same amount of time.

First, it did not have that same combination of high human capital and low income of former communist countries.

In fact, in the mid-1990s, GDP per capita was somewhat above what could be expected for the level of human capital.

Our conclusion is that low investment in Latin America is not the cause, but the result of low growth.

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