Exports of Primary Goods and Human Capital Accumulation in Latin America

Many developing countries have experienced export-led growth in the last half century.This paper asks whether the content of what economies export matters for human capitalaccumulation. We construct a small open economy model... [ view full abstract ]

Many developing countries have experienced export-led growth in the last half century.This paper asks whether the content of what economies export matters for human capitalaccumulation. We construct a small open economy model and find that expansion ofprimary exports can harm human capital accumulation if the economy is initiallyallocating significant resources to primary goods production. We then test this predictionempirically using Latin American data over the period 1965-2010 and find robustevidence in support of the hypothesis that a shift towards primary exports reduces humancapital accumulation. Given the importance of the latter for long-run growth, our resultssuggest a potential role for policy intervention.