Economic growth and human development in Latin America

The paper explores the two-way links between human development and economic growth in Latin America. Economic growth is likely to advance human development as the resource base expands, while higher human development generates greater economic growth as healthier and more educated people contribute to improved economic performance. Regression analysis shows quite strong connections from human development to economic growth in Latin America, but the economic growth to human development relationship is much weaker than that indicated by worldwide evidence, probably due to the disruptive impact of the debt crisis. Case studies of successful and unsuccessful countries show that human development success was due to good economic performance combined with high social expenditure; failures were associated with conflict, natural disasters and harsh adjustment policies. Exploration of country behaviour over time confirms that priority should be given to human development to reach a virtuous cycle of growth and higher human development.