Income distribution, productive structure and growth in South America
Between 2003 and 2012, South American economies experienced a period of relatively high growth rates. That performance was accompanied by considerable improvements in income distribution and poverty indicators. Nonetheless, structural heterogeneity remained one of the central characteristics of these economies. The aim of this paper is to analyze the role income distribution and the productive structure played in the economic growth of Argentina, Brazil, Chile, Colombia, Peru, Uruguay and
... , Uruguay and Venezuela, for the period between 1990 and 2012. this literature, income distribution is the main driver of growth, but special attention will be given to the role of consumer debit and international trade pattern. In the second case, the literature generally sets GDP growth as the main driver of productivity growth, but in this paper some attention will be draw on the role of sectoral composition of the economy. The interaction between these two regimes is called growth regime. In the second section, the paper will describe the main economic data of each of the seven aforementioned countries, trying to set the characteristics of their demand and productivity regimes. Finally, the third section will draw on the common patterns among the countries, inquiring about the existence or not of different growth regimes between groups of countries in South America. In some models, also known as 2nd generation models, post-Keynesian authors have made use of a fairly simple investment function based on, on one hand, the accelerator approach a la Harrod and, on the other hand, the profit rate approach, a la Robinson. This means that the rate of growth of capital stock will be determined by three factors: (i) the animal spirits; (ii) the rate of profit; (iii) the degree of capacity utilization. This investment function shows three important results: (1) capacity utilization becomes endogenously determined and dependent on the autonomous investment, the profit share and the saving rate; (2) economic growth depends on capacity utilization, as well as the aforementioned determinants; (3) an increase in the saving rate and profit share decreases the growth rate (which means that the so called thrift and costs paradoxes are hold). Therefore, one of the major conclusions is that there would not be any opposition between real wage and profit rate, but the opposite. This occurs because the economy would not be on the growth-distribution schedule. However, from the mid-1970s, empirical studies have shown that the relationship between wages and profits could have been negative in some countries. To tackle these evidences, the 3rd generation models, inspired by the work of Bhaduri and and Marglin and Bhaduri (1990) have led to an entire literature able to differentiate demand regimes. These models suggest that the effect of the profit margin on the profit rate ought to be separated from those related to the capacity utilization.