Driving Forces behind Premature Deindustrialization in Latin America

Seungho Lee ․ Chong-Sup Kim

Abstract

While deindustrialization is a universal phenomenon that most countries are destined to experience at a certain stage of economic development, it materialized in Latin America too soon. Most countries in the region reached peak levels of industrialization that were lower than those experienced by early industrializers and these peak levels were reached at lower levels of economic development. We present empirical evidence based on a panel dataset of 191 countries for the 1990-2018 period to suggest that premature deindustrialization witnessed in most parts of the region is a consequence of the interaction of distinct deindustrialization forces. It is a combined product of the “conventional” factors such as demographic, income and time trends and the “less conventional” ones such as the Dutch Disease, foreign direct investment inflows and deepening trade relations with China.

Keywords Premature deindustrialization․Latin America

1.Seungho Lee Chong-Sup Kim