The impact of sectoral heterogeneities in economic growth and catching up: Empirical evidence for Latin American manufacturing industries

Building on different strands of literature this paper proposes an approach to characterize the structural patterns followed by the manufacturing sector of Latin American largest economies ¡VArgentina, Brazil and Mexico¡V during the last decades. The main focus of this approach relies on the evolution of technological gaps with the world frontier. Measures of relative labour productivity with respect to the US (as a proxy for technological gaps) are used to identify industries with different degrees of modernity and to analyze their distribution in different points of time in order to establish stylized patterns in their structural trajectories.

The empirical analysis provides evidence supporting the hypothesis that the economies of the region are characterized by high and persistent sectoral heterogeneities. Moreover, it suggests that the manufacturing sector of these economies had followed a trajectory of partial catching-up with structural polarization. In short, these economies are lagging behind at the aggregate manufacturing level, but show very heterogeneous trends within their own structures. While a small fraction of industries seems to be using technologies close to the frontier or has managed to achieve fast reductions in the technological gap, the remaining industries are far away from the technological frontier and keep lagging further behind.

Keywords: Latin America; Manufacturing; Structural change; Catching-up

JEL Classification: L16 (Industrial Structure and Structural Change); O14 (Industrialization); N66 (Manufacturing and Construction in Latin America)