Economic reforms, financial development and growth: Lessons from the chilean experience

Leonardo Hernández, Fernando Parro

Research output: Contribution to journalArticlepeer-review

3 Scopus citations


Despite reform efforts, the economic performance of Latin American countries during the 1990s was disappointing with the exception of Chile, which grew at almost 7% per year. This paper tries to explain this difference. Following recent literature that highlights the role played by institutions and policies on economic growth, we estimate a cross-section econometric model over the 1960-2005 period and find that Chile's better performance can largely be explained by a combination of better institutions and reforms that have been deeper and broader in scope than those in the rest of Latin America. In addition, we estimate that improving institutions in other Latin American countries to the Chilean standard would have increased per-capita GDP growth rates by about one and a half percentage points.

Original languageEnglish
Pages (from-to)59-103
Number of pages45
JournalCuadernos de Economia - Latin American Journal of Economics
Issue number131
StatePublished - May 2008
Externally publishedYes


  • Economic growth
  • Financial development
  • Institutions
  • Reforms


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