Dependency and Economic Growth in Latin America

Abstract

Several prior empirical analyses have revealed a negative relationship between dependency and the economic performance of developing nations. However, two recent articles focusing on Latin American states report apparently contradictory findings. Kaufman, Geller, and Chernotsky (1975) found that more dependent Latin American states grow more rapidly in terms of changes in GNP, while Alschuler (1976)—analyzing virtually the same states, but a shorter time period—found that more dependent states experience slower economic growth. A comparison of the data and the indices used in the two studies reveals that there are a number of possible explanations for the differences in these findings. Scatter plots of several relationships also show that both sets of findings may have been substantially affected by extreme “outliers.” Finally, the application of panel regression analysis to the different (but overlapping) time periods analyzed in the two previous studies uncovers similar relationships between dependency and economic growth in Latin America.