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Title: Growth and External Debt: A New Perspective on the African and Latin American Tragedies

Author(s): Daniel Cohen

Publication Date: December 1997

Keyword(s): Economic Growth, External Debt and trade liberalisation

Programme Area(s): International Macroeconomics

Abstract: This paper addresses two puzzles of the growth literature: the failure of standard growth equations to account for slow growth in Latin America and Africa; and the surprising failure of trade to explain growth when trade liberalization appears to play a significant role. The paper shows that: i) African growth is readily explained by macroeconomic mismanagement and low investment; ii) trade liberalization should be taken as a proxy for good ?macroeconomic? management rather than a genuine measure of the effect of trade upon growth; and iii) poor growth in Latin America (which does not seem to be explained by the preceding feature) is explained well by a variable (constructed in the text) representing the likelihood of debt crisis.

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Bibliographic Reference

Cohen, D. 1997. 'Growth and External Debt: A New Perspective on the African and Latin American Tragedies'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1753