Since the Second World War, GDP per capita of the typical Latin American country has remained stagnant, while most of the rest of the world has experienced an unprecedented improvement in living standards. Respected scholars have identified the low productivity of Latin American economies as the main culprit for that lackluster performance. Attempts to address the productivity problem with privatization programs and free-market oriented reforms in the late 1980s and in the 1990s have seemingly ended in failure, as many governments in the area are currently in the process of reversing those reforms on the grounds that they delivered more unemployment and poverty instead of the promised prosperity. The unusually high rates of economic growth the region is currently experiencing are typically attributed to favorable international conditions rather than to any substantial progress of Latin American economies at permanently lifting their productivity. If that interpretation is correct, the recent turmoil and volatility in international markets suggests that Latin America may again face--and sooner, rather than later--its old, seemingly intractable, low productivity problem. Accordingly, the Laboratory for Aggregate Economics and Finance (LAEF) has deemed it timely to gather a small group of scholars and policymakers whose current and/or past research can shed light on the following specific question: What is (are) the source(s) of Latin America’s low productivity (Total Factor Productivity) problem and what can be done about it? 

The conference will take place in the UCSB campus on September 21-22, 2007, in the Santa Barbara Harbor Room at the University Center. The conference organizers, Lee Ohanian (UCLA) and Carlos Zarazaga (Dallas Fed), have selected papers that examine “Latin America’s Total Factor Productivity Puzzle” with models in the dynamic, general equilibrium tradition that, in the spirit of LAEF, emphasize the quantitative implications of theory and their correspondence (or lack thereof) with the relevant data. Participants will include economists and policymakers affiliated with international organizations, central banks, and academic institutions from the US as well as Latin American countries. UCSB Economics Department faculty and interested graduate students will also participate. The conference will begin with a kick-off dinner on September 20, 2007, with two full days of presentations to follow. The complete schedule of events can be found on the “Agenda” link of this website.