Real Incomes and Its Aggregates in Latin American and The Caribbean: A Tale of Convergence?

Abstract

Real incomes, consumption, government expenditures and investment for countries in Latin America and the Caribbean (LAC) for the period 1971 to 2012 are studied using a recently released source of data. Although growth in real incomes have not been uniform across all countries, for a large majority both income and consumption have been increasing since the beginning of this century. The trends indicate increasing prosperity which could lead to welfare gains if a sustained effort is made to reduce income inequality. The patterns in real investment and government consumption are more heterogeneous across countries. The majority of the South American economies, Panama, Mexico and most Caribbean economies have either maintain or increase real levels of investment. Government expenditures have been more varied; however, there is some evidence that after the global financial crises (2007-2008) a few economies increased real government expenditures when investment shares decreased.