Sep 20, 2013

Institutional Lessons from Peru and Argentina

Leaders in Argentina have chosen to return to the protectionist policies that have prevailed over most of the country’s modern economic history as well as to the old methods of forming and administering policy. Leaders in Peru, over several changes of president, have chosen to continue with reforms intended to integrate the Peruvian economy into the international economy and to upgrade policy processes − to continue Peru’s break from its history of protectionism and centralized management.
That is from this paper by Elias Baracat, J. Michael Finger, Raul Leon, & Julio J. Nogues.
I did the chart above and surprisingly did not find data of GDP per-capita for Argentina in the World Development Indicators for 2007-2012. Note that the trend was similar, although there was a difference in level, up to the early 1990s. After that Peru's GDP has increased steadily, probably reflecting the institutional changes the authors talk about. 
I did the graph below with data from both central banks. 
The chart below presents a longer term view - the last twenty years - of the rate of growth of GDP per capita. Again, no data for Argentina recently in the WDP [very bizarre!]. The standard deviation is 6.31 for Argentina and 3.57 for Peru. Roughly speaking Argentina's GDP per capita has been almost twice as volatile as Peru's. 

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