Latin America's productivity stays low and trails global average since 2017
Updated
Updated · Americas Quarterly · May 4
Latin America's productivity stays low and trails global average since 2017
10 articles · Updated · Americas Quarterly · May 4
A World Bank measure shows the region’s workers produce about one-fifth of US output, while ECLAC says the gap with the global average has widened since 2017.
The report blames resource misallocation, weak competition, size-based rules and scarce credit, with IMF and OECD research highlighting monopolies, financing frictions and a $1.8 trillion MSME funding gap.
Low productivity underpins a regional low-growth trap, but studies point to gains from digitalisation, multinational investment, data centres, knowledge industries and deeper intra-regional supply chains.
Latin America has talent but lacks 'structural plumbing.' How can it fix its economy before the AI revolution leaves it behind?
If fintech can solve the credit gap, why does a $1.8 trillion funding crisis still stifle Latin America’s most productive firms?
With a new tech boom straining fragile energy grids, is Latin America’s investment ‘Spring’ doomed to repeat past failures?
Latin America’s Productivity Challenge: Why 2.3% Growth Masks Deep Structural and Policy Failures
Overview
Latin America and the Caribbean face persistent low economic growth driven mainly by a deep productivity crisis, with labor productivity at just a third of the OECD average. This stagnation is worsened by external shocks like geopolitical tensions that have sharply increased oil prices and weakened demand from key trading partners, leading to higher borrowing costs and inflation. Structural challenges such as widespread labor informality and barriers faced by microenterprises further suppress productivity. Additionally, logistical weaknesses and limited digital innovation hinder integration into global value chains. While reforms like tax simplification and regional investment initiatives offer hope, urgent coordinated action is needed to overcome these intertwined obstacles and unlock sustainable growth.