Crises and Growth: A Latin American Perspective
Sebastian Edwards
NBER Working Paper No. 13019 , April 2007

In this paper I use historical data to analyze the relationship between crises and growth in Latin America. I calculate by how much the region’s GDP per capita has been reduced as a consequence of the recurrence of external crises. I also analyze the determinants of major balance of payments crises. The main conclusion is that it is unlikely that Latin America will, on average, experience a major improvement in long run growth in the future. It is possible that some countries will make progress in catching up with the advanced nations. This, however, will not be the norm; most Latin American countries are likely to fall further behind in relation to the Asian countries and other emerging nations. Not everything, however, is grim. My analysis also suggests that fewer Latin America countries will be subject to the type of catastrophic crises that affected the region in the past. Latin America’s future will be one of ‘No crises and modest growth.’ “

Rent Seeking and the Unveiling of ‘De Facto’ Institutions: Development and Colonial Heritage within Brazil
Joana Naritomi, Rodrigo R. Soares, Juliano J. Assunção
March 2007

Abstract
This paper analyzes the roots and implications of variations in de facto institutions, within a
constant de jure institutional setting. We explore the role of rent-seeking episodes in colonial
Brazil as determinants of the quality of current local institutions, and argue that this variation
reveals a de facto dimension of institutional quality. We show that municipalities with origins
tracing back to the sugar-cane colonial cycle – characterized by a polarized and oligarchic
socioeconomic structure – display today more inequality in the distribution of land.
Municipalities with origins tracing back to the gold colonial cycle – characterized by an overbureaucratic
and heavily intervening presence of the Portuguese state – display today worse
governance practices and less access to justice. Using variables created from the rent-seeking
colonial episodes as instruments to current institutions, we show that local governance and
access to justice are significantly related to long-term development across Brazilian
municipalities.