Technological Investment and GDP Growth in Latin America: Evidence from a Dynamic Panel Model

Abstract

This article analyses the effect of technological investment on GDP growth in selected Latin American countries using a dynamic panel model estimated through System-GMM. Although technology is commonly regarded as a major driver of economic growth, its aggregate impact in Latin America remains uneven and in some cases, weak or contradictory. The study adopts a macroeconomic perspective connected to previous evidence on innovation and productivity in SMEs, under the premise that technology contributes to growth only when it is effectively translated into productivity gains, productive linkages, and sectoral diffusion. The results show that technological investment does not generate immediate or homogeneous increases in GDP growth across the countries analysed. Its estimated short-run effect appears to be constrained by structural and institutional conditions that limit the transformation of technological investment into aggregate value added. The findings suggest that technology is a necessary but not sufficient condition for economic growth. Policy implications are therefore interpreted cautiously, as theoretically informed extensions rather than as mechanisms directly tested by the empirical model.