Latin American Economic Growth and Economic History
Director: Stephen Haber

Economic policy makers have two tools to guide them in designing policy reforms: economic theory and economic history. Economic theory informs the framing of policy options and suggests the likely outcomes of various reforms. There is a real difference, however, between theoretical economies and real ones. All real world economies, and Latin Americas in particular, strongly depart from the zero-transactions cost assumptions of much of modern economic theory. Economists and policy makers therefore turn to economic history as a natural laboratory that can inform policy debates and assist in framing policies for the particular institutional environments they face.

In perhaps no other region of the world has economic history played as crucial a role in informing policy making as it has in Latin America. The problem is that the historical record is poorly understood, and the result has often been policies which have served to dampen, rather than foment, economic development. Perhaps the most obvious examples of this phenomenon were the import substitution industrialization policies followed by virtually all of the regions governments during the period 1950-1980. These policies, premised on a set of notions about the economic history of the region during the nineteenth and early twentieth centuries, sought to encourage industrial development through trade barriers, artificially high exchange rates, restrictions on foreign investment, and unwieldy state-owned enterprises. The result was a highly concentrated and inefficient industrial structure, constantly in need of government subsidization.

This research program seeks to improve the understanding and use of Latin American economic history, and has two basic purposes. The first is to develop and publish basic research on Latin Americas economic history that will be useful to policy-makers as they debate and frame economic policy reforms in the coming decades. The second is to transform the approaches and methods that have dominated the field of Latin American economic history for the past three decades, and that, by extension, have served policy making so poorly. We seek to bring to bear the tools of modern economic theory, econometric analysis, and archivally-based data retrieval to the study of Latin Americas economic past. We therefore view the publication of research by this project as having an impact well beyond its substantive findings. We seek to produce basic research that can inform policy, and we seek to reengineer the methodological and epistemological rules that underpin research in the field. In so doing, our goal is to provide economic policy-makers with a scientifically sound and socially useful body of scholarship that can inform decision-making.

The first phase of this project, a conference on Mexican economic history, has already been funded by the William and Flora Hewlett Foundation. Economic historians of Mexico, the United States and Europe; development economists; and economic policy-makers will participate, and the resulting papers will be published in the Social Science History Series of the Stanford University Press. Following this initial effort, the project will branch out to other topics and regions of Latin America.

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