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Is Latin America Catching Up? A Time-Series Approach

Most Latin American economies ended the twentieth century further behind the United States (in terms of productivity) than they had been in 1950. We investigate whether this reflects the effect of occasional economic setbacks or a systematic tendency to fall behind the United States. This is done using a time-series approach that allows for up to two structural breaks in a series. We find evidence that relative productivity is a (broken) trend-stationary process for most of the 18 countries considered but that only one, Chile, shows evidence of catching up with the United States at the century's close.