Save more to improve infrastructure in Latin America and the Caribbean
Eduardo Cavallo, 3 April 2013
Latin America and the Caribbean have less infrastructure than the rest of the world. What they have is also of much poorer quality. This column argues that to reap the rewards of good infrastructure, Latin American and Caribbean countries must increase both investment and saving over the long-term by creating institutional capacity, strengthening the rule of law, and building stable macroeconomic-policy frameworks. It won’t be easy.
Saving and investment, like the chicken and the egg, involve circular causality. But regardless of causality, there is no doubt that Latin America and the Caribbean need more of both.
That the region has an infrastructure problem hardly requires an explanation:
Tags: Caribbean, investment, Latin America, savings
The trend reversal in income inequality and returns to education: How bad is this good news for Latin America?
Augusto de la Torre, Julián Messina, 7 March 2013
The last decade has seen unprecedented economic and social achievements in Latin America. This column investigates the relationship between changes in the labour market and the drop in income inequality across the continent. There is certainly room for more research to help us better understand Latin America’s spectacular decline in income inequality, but what is clear is that the good news is tempered by the fact that the specialisation of the region’s economies are relatively low in skill intensity and therefore productivity.
Latin America witnessed unprecedented economic and social achievements during the last decade. In particular, the year 2003 appears as an important inflexion point for the region’s economic history, a point that we have highlighted in several World Bank publications1.
Topics: Labour markets
Tags: education, income inequality, Latin America
Why scarce small and medium enterprise financing hinders growth in Latin America: A role for public policies
Rolando Avendaño, Niels Boehm, Elisa Calza, 27 January 2013
Small and medium-sized enterprises provide the vast majority of employment in developing countries and are keystones in the productive structures of emerging economies. This column argues that the growth of such firms is being hindered by scarce financing. Looking at Latin America, it is clear that public financial institutions are increasingly important in meeting credit demands. If emerging economies want to see long-term growth, there needs to be a comprehensive approach to reducing the ‘traditional’ barriers to small and medium enterprise financing.
Small and medium enterprises represent a significant share of emerging economies’ business fabric. Nevertheless, they continue to face multiple challenges in meeting their financing needs. Public financial institutions have come to play an active role in addressing these financing gaps through new operational mechanisms and adapted instruments.
Tags: Finance, Latin America, SMEs
Monetary policy in Latin America: Where are we going?
Christian Daude, 10 December 2012
Latin American central banks are facing new challenges in the form of unprecedented levels of uncertainty and exchange rate appreciation pressures. This column, focusing on Brazil, Chile, Colombia, Peru and Mexico, argues that there is an overestimation of the potential output in several Latin American economies, a lack of an explicit policy direction from central banks, and lacklustre frameworks for macroprudential policy. Although inflation targeting has served countries in Latin America well, significant risks remain.
Inflation targeting has served countries in Latin America well . They have achieved macroeconomic stability by reducing inflation and the pass-through of external shocks such as oil price and exchange rate fluctuations (cf. Mishkin and Schmidt-Hebbel 2007).
Topics: Macroeconomic policy, Monetary policy
Tags: Brazil, Central Banks, Chile, Colombia, foreign exchange, inflation targeting, Latin America, Mexico, Peru
Coping with financial crises: Latin American answers to European questions
Eduardo Cavallo, Eduardo Fernandez-Arias, 17 October 2012
The Eurozone body politic seems to be slowly learning the lessons for crisis management. This column argues that Latin America’s decades of financial crisis can provide key insights for Europe.
Many peripheral Eurozone countries are suffering from financial and competitiveness problems reminiscent of previous Latin American challenges. The analogy has been noticed many times.
Topics: Global crisis
Tags: Eurozone crisis, Latin America, moral hazard
Fiscal policy in Latin America: How much room for manoeuvre?
Christian Daude, Ángel Melguizo, 11 September 2012
Latin American economies performed remarkably well during the crisis – and the years before. This column compares the fiscal policies in the region with those of advanced economies and discusses the factors behind the differences, before outlining some areas for policy reform.
Latin America and the Caribbean (LAC) continue to show a relatively strong economic performance despite the current slowdown in economic growth – mainly due to the Eurozone crisis and China’s slower growth.
Topics: Development, Macroeconomic policy
Tags: fiscal policy, Latin America
Is this the end of populism in Europe?
Luigi Guiso, Helios Herrera, Massimo Morelli, 25 January 2012
What good might come from Europe’s crisis? Profligate governments in Italy and Greece, while pandering to the masses, have left their countries with crippling debt. This column draws parallels with Latin America and argues that the current hardship may sound a death knell for populism in southern Europe, as it has elsewhere.
The collapse of Silvio Berlusconi’s government in November 2011 leaves us relieved, even if it was after a protracted ‘death scene’ that brought Italy and the Eurozone to the very edge. Now questions arise:
Topics: Europe's nations and regions, Politics and economics
Tags: Eurozone crisis, Greece, Italy, Latin America
What have I done to deserve this? Global winds and Latin American growth
Eduardo Levy Yeyati, Luciano Cohan, 12 January 2012
Four years ago, there was growing support for the idea of ‘decoupling’ – that emerging markets were becoming less affected by business cycle swings in developed economies. Then came the global crisis. Focusing on Latin America, this column argues that the 2010s will be a far harder decade. But that might not be such a bad thing if it forces these economies to look again at their growth strategies.
Four years ago, when what would become the worst crisis in 80 years was just a concern for the important but encapsulated US mortgage market, academics and practitioners were debating whether the emerging world, which showed no signs of weakening as the developed world sunk into recession, had entered a new age of real (business cycle) ‘decoupling’.
Tags: business cycle, decoupling, global crisis, globalisation, Latin America
Welcome to Vox.LACEA: Raising the bar of economic policy discussions in Latin America and the Caribbean
Richard Baldwin, 9 March 2011
VoxEU welcomes the latest member of the Vox consortium – Vox.LACEA – that provides policy relevant research and commentary on Latin America and the Caribbean. Launched in January, it hopes to become a major resource for economists, policymakers, and journalists with an interest in the economies of the region.
When Vox was set up in June 2007, we were helped by the Italian language site LaVoce.info.
Topics: Frontiers of economic research
Tags: Caribbean, Latin America
Social protection for all: How to provide pension coverage to middle-class workers with informal jobs
Rita Da Costa, Juan Ramón de Laiglesia, Ángel Melguizo, Emmanuelle Martinez, 12 February 2011
Informal employment remains pervasive in Latin America and the Caribbean. Many workers, not just the disadvantaged, are informal and contribute irregularly, if at all, to a pension plan. This column argues that governments should consider extending social pensions and stimulating individual saving.
The coverage of contributory social protection schemes in Latin America is low. As highlighted by the World Bank, in the case of old-age pensions, coverage remains under 50% of the economically active population for all but three countries – Chile, Costa Rica and Uruguay – despite the reforms introduced since the 1990s (Rofman et al. 2008).
Topics: Development, Labour markets
Tags: informality, Latin America