The competitive indexes suggest that Latin America has divided by itself into high achieving countries like...

The competitive indexes suggest that Latin America has divided by itself into high achieving countries like Chile and low achieving ones like Nicaragua, because of this blanket policy for economic growth will not work. (Please expand on this)

Expert Solution

High income countries and low income countries both need, robust policy planning, but there is no one fit for all policies. As the statement mentions Chile, it is the country with the fastest growth rate in Latin America with high per capital income and lower level of corruption. So, Chile is setting the growth trend. In contrast to Chile, the country of Nicaragua is one of the poorest economy and needs strong policies to put it on the path of fast growth rate. The first reason for the different policies is the core dependence of the economy. Chile is a service based economy, where the service sector is contributing over 53% of the GDP, so it requires policies that can bring stability and consistency in growth. But, a country like Nicaragua is agricultural economy, then it requires farm mechanization, good quality seeds, multi cropping and investment in agricultural research to find ways to enhance the output. Further, infrastructure development and via FDI is also required for these countries. So, these policies are different to what is required by Chile. The second reason is the different stage of growth and focus of the economy. Chile is at the advanced level, but Nicaragua is at the the lower level of growth. So, different set of policies will do more good for these nations.

Rahul Sunny answered 1 year ago

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