Complexity systems and middle-income trap: the long-term roots of Latin America underdevelopment

Sistemas complexos e armadilha da renda media: as raízes de longo prazo do subdesenvolvimento latino-americano

Abstract

Our intent is to reinterpret the concept of middle-income trap using the language of the complex system approach to refer to the unpredictability, non-linearity and the enormous range of possible behaviors of economic development in the long-term time series. By redefining the concept of trap in those terms, we propose to shed light on the institutional background of economic development. In order to advance our argument, we conduct a case study of Latin America, a region that has presented an unstable and non-linear economic trajectory across the 20th century. We argue that the combination between the colonial economic legacy and the political fragmentation amid the process of independence shaped the socio-economic structure and institutional capabilities for years to come, restricting the possibilities of overcoming underdevelopment.

Keywords:
middle-income trap; complex system; institutions; Latin America; underdevelopment