Reasons for relatively slow economic growth in Latin American countries since the 1920s do NOT include which of the following?

• A. scarcity of natural resources
• B. lack of savings to finance investment
• C. lack of political stability
• D. low emphasis on education

Answer: (A)

The main idea here is identifying what actually helps explain why Latin American economies grew slowly since the 1920s. The standard explanations point to constraints on investment and productivity, not a lack of resources. A scarcity of natural resources would not hinder growth in most Latin American countries because, in many periods, they were rich in natural resources. The slower growth is better attributed to a shortage of funds to finance investment (low savings relative to investment needs), political instability and policy uncertainty (which scare off long-run investments and reforms), and a relatively weak emphasis on education (limits on human capital and productivity). So, since resource scarcity isn’t the issue—indeed resources were plentiful—the reason listed in that option is the one that does not fit the common explanations for slow growth.