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(a)Growth: Of the 20 countries, 11 grew faster over the entire period 1965–2015 than the world, and thus, there seems to be mild convergence. Growth rates of the countries are not correlated with size as countries with a smaller population grew as rapidly as those with a larger population.

The debt crisis resulted in a slowing down of the Latin American economies. Only five countries, Chile, El Salvador, Guyana, Jamaica and Uruguay, grew faster in the two decades after the crisis than they had done in the two decades before the crisis (Table 7). But the effect of the debt crisis in slowing growth tapered after two decades or so. If one divides the period 1965–2015 into two, before the debt crisis of 1982 and after, one finds that 10 countries grew faster before the crisis and 10 grew faster after the crisis. Also, except for Chile, El Salvador and Jamaica, the rest of the countries grew faster in this century than they had in the last two decades of the previous century. But even over the period 2001–2015, most countries saw a decline in their growth rates after the onset of the 2008 crisis and then a recovery. Only Bolivia, Guyana and Uruguay grew faster after the crisis than they had done earlier, and only Brazil did not experience a recovery over the 2010–2015 period.

We have seen above that the gap between per capita income in the Latin American region as a whole and the high-income countries did not lessen in the period 1965–2015. We now examine whether there was convergence among the Latin American countries. We ran regressions of the growth of per capita income over various periods, e.g. 1965–2015, 1983–2015, etc. against per capita income in the initial period. We usually did not find any significant relation except for the period 1983–2000 when the Latin American economies grew very slowly. During this period, there was a significant coefficient, at the 5% level, but its sign was positive implying that the economies diverged.

Table 7. Average Annual Growth Rates for Different Periods

Source: World Bank World Development Indicators.