IPD AI

Elite and Structural Inertia in Latin America

06/01/2008
Working Paper

This paper deals with the idea that the production structure and knowledge diversification define the feasible set of conditions for income distribution and elite concentration. The evidence supports the notion that a diversified knowledge structure generates and distributes rents in a more equitable way.

Rents are distributed according to the different competencies (skills and capabilities) and complementarities needed to produce complex products that incorporate knowledge. A production structure based on natural resources or on cheap labor generates rent-seeking behavior reinforcing that pattern and resisting structural change. This paper sheds light on the role played by these factors in Latin America.