Thursday, February 28, 2013

The sources of growth: Latin America and its growth expectations (II)

For the purpose of economic growth explanation, the state of mind issue is considered a cultural variable. It is based on Motivations dealing with needs, values and expectations. Within economics development literature, there is a school of thoughts, which concern with this factors as the source of growth. According to the so called Cultural thesis, there are industrial values which are key to unlocking the economic potential of poor countries. These values includes hard work, responsibility, punctuality, and achievement .Most adherents to this view, believe that these values can be inculcated through a deliberated effort, let say education and improvement of human capital endowments. (Excerpted from Development and Underdevelopment: The political economy of global inequality, 4th edition. Seligson, M and Passé –Smith ,J.2008). Thus, the success of Asian countries in the last decades of the XX century, has led some to believe that there are cultural values found there; which boosted Asian economies growth and which jas been labeled as the “Confucian ethic”, a variant of the notion of “Protestant Ethic”, and its relevance for the success of immigrants in the USA, and the post WW II experience in Europe . Following this approach, in the Latin America case, it should be important to clearly identify the “Catholic ethic” and its impact on the incentives for economic growth, quite below expectations for a long time. The same would apply in other regions struggling for economic progress.However,this would wrongly suggest that these later regions, have in its cultural values a constraint. The first implication of overemphasizing this variables, might be to hide the negative incidence of other ones, like the impact of the State and weak Institutions,short run minded politicians,corruptions and the like . But,in Latin America,(XV century) quite the opposite to the USA , two hundred years later (the XVII century), the State was not defined to support individual achievement and entrepreneurship. Instead, it was conceived as an instrument to collect taxes and manage rents, not much different as others cultures did before. Therefore, the complementary nature of those cultural variables with institutions,and good public virtues, did not worked properly in Latin America, at the time of the Birth of Plenty (1820). It was only in the last decades of the XX century, coupled with efforts to modernize the State, when this cultural values have become more relevant in its complementary nature from the economic pint of view. Now, is the time when the state of mind matter most, as long as there is a wider space for individuals to seek for achievements, whatever its inspirations,as long as Latin America has engaged itself in pursuing a better and moder State. However, a second implication,(perhaps a key one) deal with the “Catholic ethic”, and the timing for the “Birth of plenty” in Latin America. My hipothesis is that Latin America is whithin the timing for plenty( by the way this timing might be fifteen years or so), but Does the Catholic ethic add up to this current timing?.I guess the answer goes beyond economists.