bluuebunny/crossref_metadata_2025 huggingface dataset:
Country Program Evaluation: Dominican Republic 2013-2016
Authors: Ramirez-Goldin Ana , Schijman Agustina , Figueroa Claudia , Rodrigo Maria Fernanda , Stone Leslie F. , Seiwald Raphael , Vargas Patricia
Published: March 2024

This will be the fourth independent evaluation by OVE of the IDB's country program with the Dominican Republic, and the first to cover the work of the entire IDB Group in the country. This Country Program Evaluation (CPE) covers the IDB Group's program over the period 2013-2016, which was guided by the Bank's country strategy with the Dominican Republic 2013-2016. This CPE therefore aims to analyze the IDB Group's relationship with the country, taking an independent viewpoint, assessing in particular the program's relevance and effectiveness, including both financial and nonfinancial products offered by the IDB Group during the period under analysis. This evaluation is intended as an input to the new country strategy document the IDB Group is preparing. The evaluation draws upon a diverse range of sources of information. These include interviews with key respondents: current and former government civil servants, project executing agencies, IDB Group sector specialists, international cooperation partners, members of academia and civil society familiar with the country's development challenges and individuals from the various sectors in which the Bank works. The Bank's programming, supervision (PMR, PSR) and evaluation (PCR and XPSR) documents were also analyzed. OVE backed up its documentary review with an analysis of internal and external databases.
Approach Paper: Country Program Evaluation: Bahamas 2010-2017
Authors: Ávalos Nayda , Fryer Michelle , Fajgenbaum Jose , Alonso Pablo , Sadeghi Patricia , Pires Jose Claudio Linhares
Published: March 2024

As part of its 2016-17 work plan, the Office of Evaluation and Oversight (OVE) is preparing the evaluation of the Inter-American Development Bank Group’s (IDBG) country program with The Bahamas for the period January 2010–June 2017. Thispaper sets out the proposed approach and methodology for the planned Country Program Evaluation (CPE), OVE’s third occasion for the country. Like other CPEs, this evaluation will seek to examine IDB’s relationship with the country from an independent perspective. It aims both to strengthen accountability and facilitate learning and serve as an input to the new country strategy that is under preparation for 2018–2022.
Country Program Evaluation: Brazil (2000-2008)
Authors:   Inter American Development Bank
Published: March 2024

This Country Program Evaluation (RE-355) analyzes the recent performance of the Bank's portfolio of operations. Two country strategies were approved during 2000-2008, which were prepared in two very different contexts in Brazil. The 2000-2003 strategy was prepared following the 1999 crisis that had led to difficulties in terms of flows of resources to the country, high levels of debt, and macroeconomic uncertainties. The 2004-2007 strategy was approved when the government had the macroeconomic situation under control and an agreement had been reached with the Bank to reduce the amount of resources in the portfolio. This document describes the country context and development challenges, then discusses the program's contribution, and evaluates the execution performance and the results achieved.
Who Benefits from Labor Market Regulations?: Chile 1960-1998
Authors: Montenegro Claudio E. , Pagés Carmen
Published: March 2024

Economists have examined the impact of labor market regulations on the level of employment. However, there are many reasons to suspect that the impact of regulations differs across types of workers. In this paper we take advantage of the unusually large variance in labor policy in Chile to examine how different labor market regulations affect the distribution of employment and the employment rates across age, gender and skill levels. To this effect, we use a sample of repeated cross-section household surveys spanning the period 1960-1998 and measures of the evolution of job security provisions and minimum wages across time. Our results suggest large distribution effects. We find that employment security provisions and minimum wages reduce the share of youth and unskilled employment as well as their employment rates. We also find large effects on the distribution of employment between women and men.
Politics, Policies and the Dynamics of Aggregate Productivity in Colombia
Authors: Eslava Marcela , Meléndez Arjona Marcela
Published: March 2024

This paper describes private actors' involvement in Colombia's policymaking process. While more transparent and formal channels are used to discuss horizontal policies, they are also less effective. The adoption of targeted policies, however, follows a faster track and depends more on political power than on those policies¿ potential as engines for productivity growth. Data on policies and political characteristics across sector-region units are used to further characterize the different groups¿ weight in policymaking, and the effect of the implied unbalance on aggregate productivity. Electoral weight and being represented by business groups and associations are found to be important determinants of the policy benefits received by a sector in a region, especially when activities are located in regions affected by armed conflict. It is also found that the resulting imbalance of policies damages aggregate productivity.
Reforms and Counter-Reforms in Bolivia
Authors: Evia V. José Luis , Candia C. Fernando , Jemio M. Luis Carlos
Published: March 2024

This paper analyzes reforms and counter-reforms in Bolivia in recent decades and their effects on the policymaking process (PMP) and productivity. Bolivias PMP has shifted from a formal representative democracy to a participative and direct type of democracy where street protest and other non-conventional forms of political participation have become dominant. While reforms have increased productivity, they have failed to secure the political support necessary to assure long-term sustainability. In contrast, counter-reforms have so far enjoyed extensive political support, but productivity has stagnated since this process started, with declining economic growth and job creationdevelopments likely to undermine support for the counter-reform process. The document stresses the need to rebuild a consensus around a PMP capable of increasing productivity and employment creation while restoring social cohesion.
Asset Inequality Does Matter: Lessons from Latin America
Authors: Londoño Juan Luis , Birdsall Nancy
Published: March 2024

In light of recent results, the fight against poverty in Latin America has been far from satisfactory. The standard approach of multicultural credit agencies will continue to be limited if it does not stress the central role of the distribution as well as the accumulation of productive assets, especially human capital. After removing fiscal and trade distortions with structural reforms, insufficient levels of human and physical capital accumulation and highly skewed asset distribution are critical growth constraints for Latin America. Policies aimed at reducing inequalities in assets accumulation should be at the center of a new approach for poverty eradication and increased growth in Latin America at the start of the new century.
Inequality and the Family in Latin America
Authors: Hausmann Ricardo , Székely Miguel
Published: March 2024

In this paper, social mobility is measured by looking at the extent to which family background determines socioeconomic success. An index of social mobility for developing countries is proposed based on the correlation of schooling gaps between siblings.
International Initiatives to Bring Stability to Financial Integration
Authors: Hausmann Ricardo , Fernández-Arias Eduardo
Published: March 2024

Financial liberalization and integration have generated disappointing results. They were supposed to set up a win-win situation: capital would flow from capital-abundant, low-return, aging industrial countries to capital-scarce, high-return, young emerging countries. Growth in receiving countries would accelerate and both giver and receiver would be happier, while everyone's diversification opportunities improved. As a bonus, emerging market policymakers would be disciplined by losing access to a captive local financial market.
Bank Credit to Small and Medium-Sized Enterprises: The Role of Creditor Protection
Authors: Micco Alejandro , Galindo Arturo
Published: March 2024

This paper develops a model showing that inefficient legal protections disproportionately increase financial restrictions for creditors that have less wealth. Due to fixed monitoring costs in equilibrium, banks will not monitor small firms, and therefore these firms will adopt risky technologies that imply a higher probability of bankruptcy. This implies that inefficiencies in the bankruptcy procedure will have a greater effect on small firms vis-à-vis large ones. Using a survey of firms in 62 countries around the world (WBES) and econometric techniques that allow us to deal with observed and unobserved country-specific components, as well as with partial endogeneity, the paper explore the role of creditor protection on small and medium-size enterprises access to bank credit. It is found that better protection of creditors reduces the financing gap between small and large firms.
Structure and Development of Financial Institutions and Links with Trust: Cross-Country Evidence
Authors: Chong Alberto E. , Calderón César , Galindo Arturo
Published: March 2024

We explore the links between trust and a broad range of financial structure and development measures. Our base sample is a cross section of 48 countries and the analysis covers the period 1980-1994. We use a new World Bank data set that provides the most comprehensive coverage of financial development and structure to this date. We find that trust is correlated with financial depth and efficiency as well as with stock market development. Results hold when using an instrumental variable approach, and they are robust to changes in specification when using a formal Sala-i-Martín sensitivity analysis.
Intergenerational Mobility in Latin America
Authors: Gaviria Alejandro , Behrman Jere R. , Székely Miguel
Published: March 2024

High inequality has long been regarded as one of the main problems facing Latin American countries. To understand better the determinants of inequality and to help guide thinking about policy options, it is useful to know whether inequality mainly reflects low intergenerational mobility or whether it is driven by differences in individual characteristics that arise independently of family background. In this paper we use five household surveys with questions about parental socioeconomic characteristics for adults, and a set of 112 standard household surveys to examine the intergenerational transmission of schooling and occupational status in Latin America and the United States. We find that intergenerational mobility is much higher in the United States than in Latin America, that there are sizable differences in mobility within Latin America, and that mobility in Latin America is strongly associated with schooling levels and expenditures on education.
The Growth-Interest Rate Cycle in the United States and its Consequences for Emerging Markets
Authors: Talvi Ernesto , Fernández-Arias Eduardo , Reinhart Carmen M. , Calvo Guillermo A.
Published: March 2024

At the time of writing there were widespread concerns about the health of the U.S. economy. There is conclusive evidence that the pace of growth has slowed, which has prompted the Federal Reserve to cut interest rates on two occasions (a total of 100 basis points thus far). As usual, when faced with this kind of turning point, analysts and policy makers alike wonder whether the United States will achieve a "soft landing" or whether the downturn is more serious and protracted in the worst scenario, the new weakness could signal the end of the new economy. Furthermore, recent inflation surprises have not been encouraging, as higher-than expected inflation numbers may curtail the Federal Reserve's desire and ability to act counter cyclically.
The Internet and the Ability to Innovate in Latin America
Authors: Micco Alejandro , Chong Alberto E.
Published: March 2024

In this paper we provide an overview of the situation of the Internet in Latin America and argue that, although latecomers, Latin American countries could in principle catch up at a faster pace and a lower cost. But that will depend on the environment for innovation in the countries; in that respect, the adoption of the Internet may prove to be no different than other technological changes. The paper also discusses how the degree of innovativeness in a country helps explain the extent to which new technologies may be more effectively absorbed. What is surprising about this relationship is that it is valid even when isolating the fact that countries with better telephone infrastructure are also the ones with more Internet hosts. We found that the capacity to innovate and assimilate new technologies is not just a matter of income or infrastructure endowment.
Multilateral Safety Nets for Financial Crises
Authors: Fernández-Arias Eduardo
Published: March 2024

There is an increasing need for a system of international lending of last resort (ILLR) to provide a safety net in the event of financial crises in vulnerable countries as financial globalization deepens and spreads. Multilateral progress to address liquidity and solvency crises has been patchy and inconsistent, with no clear distinction between the two; in particular, there is still no framework to address sovereign debt restructuring. This paper proposes an integrated system of specialized ILLR facilities to address problems of liquidity, adjustment, and debt restructuring in a focused but robust way as crises evolve and morph, structured in tiers to cater to countries capacity to prequalify for automatic support. It further proposes feasible legal reform to subject creditors to standstills and seniority dilution as in domestic bankruptcy in order to empower ILLR to facilitate orderly workouts in debt restructuring. Multilateral development banks would play important supporting roles.
Business-Government Interaction in Policy Councils in Latin America: Cheap Talk, Expensive Exchanges, or Collaborative Learning?
Authors: Schneider Ben Ross
Published: March 2024

While effective industrial policy requires close cooperation between government and business, there is little agreement on what makes that cooperation work best. This paper analyzes institutional arrangements for public-private cooperation and the character of private sector representation. Questions on institutional design focus on three main issues: i) maximizing the benefits of dialogue and information exchange; ii) motivating participation through authoritative allocation; and iii) minimizing unproductive rent seeking. Key elements in the nature of business representation through associations are the quality of research staff and internal mechanisms for reconciling divergent preferences within associations. The empirical analysis also disaggregates councils by scope (economy-wide versus targeted), function (trade, upgrading, technology, etc.), sector (agriculture, industry, services), and level (national, provincial, and municipal).
Bank Ownership and Lending Behavior
Authors: Micco Alejandro , Panizza Ugo
Published: March 2024

This paper examines whether bank ownership (public versus private, domestic versus foreign) is correlated with bank lending behavior over the business cycle. The paper finds that state-owned banks may play a useful credit-smoothing role because their lending is less responsive to macroeconomic shocks than the lending of private banks. The paper investigates whether this differential behavior is due to an explicit objective of stabilizing credit or to the presence of "lazy" public bank managers; evidence is found in support of the former hypothesis. In the case of foreign-owned banks, the paper finds that the results are less clear-cut and argues that this finding is in line with existing theoretical models.
Living with Dollarization and the Route to Dedollarization
Authors: Leiderman Leonardo , Galindo Arturo
Published: March 2024

Financial dollarization in Latin America has been growing over time in spite of a major reduction in inflation and a shift toward central bank independence. After discussing the key stylized facts of dollarization and dedollarization in the region, we discuss the risks this process poses to the region. In particular, we explore the validity of concerns about the effectiveness of monetary policy in a dollarized economy and about a loss of seigniorage revenue in such an economy. After concluding that to a large extent these concerns lack empirical support, we focus on the main reason for concern: increased vulnerability due to the dollarization of public and private debt. We emphasize the importance of precautionary/regulatory measures to limit the scope of mismatches originating from liability dollarization, and of developing financial instruments designed to hedge against currency risk. Moreover, we deal with the experience of policies directly aimed at deepening domestic financial markets in local currency assets and in gradually lengthening the maturity of these assets. We find that important lessons from the experience of dedollarization in Israel are of particular interest for Latin America.
Rent Seeking and Democracy in Latin America: What Drives What?
Authors: Chong Alberto E. , Calderón César
Published: March 2024

Drawing on previously unused objective institutional data, we provide evidence for the causal link between rent-seeking behavior and democracy in Uruguay, a country where both rent-seeking behavior and political shifts have varied widely in the last 80 years, but where ethnolinguistic heterogeneity and income inequality have remained historically low. The latter helps better identify some pure political interactions and how they are linked with rent-seeking outcomes. We find that the presence and duration of democratic regimes appear to have been conducive to a decrease in rent-seeking actions in Uruguay, although the reduction in rent seeking does not appear to have had a bearing on the quality of democratic regime in the country. While the duration of democratic regime may impact rent-seeking behavior, rent seeking also displays a causal link to democratic duration.
Targeting the Structural Balance
Authors: Dos Reis Laura , Panizza Ugo , Manasse Paolo
Published: March 2024

This paper discusses whether a country should conduct fiscal policy by targeting a structural (or cyclically adjusted) fiscal balance. The paper is divided into three sections. The first section discusses the concept of cyclically adjusted balance (CAB) and points out practical and conceptual problems related to the interpretation and the measurement of a CAB. The second section discusses the theoretical rationale for having a fiscal rule in general and a rule defined in terms of a cyclically adjusted balance in particular. The third section discusses conceptual and practical problems with adopting fiscal rules and rules that target the structural balance.
What Do You Think of the IDB?: Conclusions from an Opinion Survey of Latin American Leaders about Multilateral Organizations
Authors: Bassi Marina
Published: March 2024

This document analyzes the results of a Web-based survey conducted by the Research Department to assess how the IDB is viewed by political and corporate leaders in the region. The questionnaire included 31 questions that compared the IDB to the IMF, World Bank, CAF, BCIE and CDB. The sample includes the responses of 336 representatives from the 26 Latin American and Caribbean IDB member countries. In general, the IDB has a better image than the other multilateral organizations in understanding development problems and contributing to their solutions. Its main comparative advantage is in the design of social service projects (education, health and social security). The IDB also is clearly perceived to outperform its peers in public sector modernization and infrastructure projects. The IDBs weakest areas are related to its efficiency (lengthy loan approvals) and efforts to help discipline macroeconomic and other policies. Respondents believe that all international organizations should expand their technical assistance and knowledge activities not tied to projects or loans. For the IDB, the survey results also assign a high priority to increasing projects in social areas.
Crisis Response in Latin America: Is the "Rainy Day" at Hand?
Authors: Montiel Peter J. , Fernández-Arias Eduardo
Published: March 2024

This paper examines the countercyclical policy options available to Latin American countries in the face of the current global economic crisis, concluding that most of the major countries in the region appear to possess the fiscal space (as measured by credible fiscal sustainability and debt headroom) to run prudent countercyclical fiscal deficits. Those countries should undertake a constrained fiscal expansion focused on productive public spending and financed by rainy day fundslarge stocks of foreign exchange reserves that they have accumulated during recent yearsrather than by market borrowing. The recent surge in multilateral financial activity to alleviate market illiquidity, whether intended for reserve or budget support, strengthens the case for this policy prescription: with multilateral support, the appropriate policy response is more expansionary, and its financing is less reliant on market borrowing.
The Multilateral Response to the Global Crisis: Rationale, Modalities, and Feasibility
Authors: Rebucci Alessandro , Powell Andrew , Fernández-Arias Eduardo
Published: March 2024

The paper reviews the case for a strong multilateral response to the global crisis in emerging markets (EMs). It discusses modalities and feasibility of intervention and its associated risks, depending on country circumstances of fiscal space and liquidity needs. The specific role of Multilateral Development Banks (MDBs) in ensuring the development effectiveness of the fiscal response is also discussed. The paper concludes by highlighting the international financial architecture issues raised by the global crisis that cannot be addressed immediately but will need to be dealt with once the current crisis has been tamed.
Financial Development and TFP Growth: Cross-Country and Industry-Level Evidence
Authors: Arizala Francisco , Cavallo Eduardo A. , Galindo Arturo
Published: March 2024

This paper estimates the impact of financial development on industry-level total factor productivity (TFP) growth using a largely unexploited panel of 77 countries with data for 26 manufacturing industries for the years 1963 to 2003. A significant relationship is found between financial development and industry-level TFP growth when controlling for country-time and industry-time fixed effects. The results are both statistically and economically significant. TFP growth can accelerate up to 0.6 percent per year, depending on the external finance requirement of industries, following a one standard deviation increase in financial development. The results are robust to different samples and specifications.
Institutional Quality and Fiscal Transparency
Authors: Chong Alberto E. , Andreula Nicoló , Guillén Jorge
Published: March 2024

This paper uses new data on fiscal transparency for a cross-section of countries; these data possess several advantages. First, the data are based on in-depth reports using a standardized methodology and protocol. Second, this study covers 82 countries, more than previous comparable studies. Third, the fiscal measures used have been obtained with the collaboration of government authorities, which makes them particularly reliable. Finally, the data collection has been undertaken at a high level. These new data permit examination of a relevant but little-studied issue, the role of institutional quality in a countrys fiscal transparency. It is shown that there is in fact a causal relationship between institutions and transparency. The findings are robust to changes in specification and a host of transparency sub-measures.
Why Do Lazy People Make More Money?: The Strange Case of the Public Sector Wage Premium
Authors: Panizza Ugo
Published: March 2024

Empirical work suggests the presence of a public sector wage premium, the reasons for which are investigated in this paper. The results demonstrate a higher premium paid to women and premium decreases concurrent with skills. Job security undermines the incentive to work hard and forces the public sector to pay higher wages. Thus, the public sector wage premium can be used as an indicator of inefficiency in the public sector.
Inequality, Institutions, and Informality
Authors: Chong Alberto E. , Gradstein Mark
Published: March 2024

This paper presents theory and evidence on the determinants of the size of the informal sector. We propose a simple theoretical model in which the informal sector's size is negatively related to institutional quality and positively related to income inequality. These predictions are then empirically validated using different proxies of the size of the informal sector, income inequality, and institutional quality. The results are shown to be robust with respect to a variety of econometric specifications.
Currency Mismatches, Balance-Sheet Effects and Hedging in Chilean Non-Financial Corporations
Authors: Hansen Erwin , Herrera Luis Oscar , Cowan Kevin
Published: March 2024

Using a new database on the currency composition of assets and liabilities, this paper explores the determinants and consequences of currency mismatches in Chilean non-financial firms. As in previous firm level studies for Chile, we find that in periods following a depreciation firms with higher dollar debt do not underperform their peso counterparts. However, once we adequately control for differences in the currency composition of assets, income and net derivative positions, we do find a significant balance sheet effect. In addition, we find that derivatives play a role in insulating firm level investment from exchange rate shocks. In line with previous studies, we also find evidence of currency matching in Chilean corporates. Firms in Chile actively reduce the risks associated with exchange rate exposure by matching the currency composition of their debt with that of their income and assets, and by taking on derivatives if no "real" hedge is available. Finally, we find significant changes in the level of net currency exposure after the exchange rate was floated in 1999. We argue that one possible interpretation of these results is due to the effect of higher exchange rate variance on the relative risk of domestic and foreign debt.
Determinacy and Learnability of Monetary Policy Rules in Small Open Economies
Authors: Llosa Gonzalo , Tuesta Vicente
Published: March 2024

This paper evaluates under which conditions different Taylor-type rules lead to determinacy and expectational stability (E-stability) of rational expectations equilibrium in a simple New Keynesian small open economy model, developed by Gali and Monacelli (2005). In particular, we extend the Bullard and Mitra (2002) results of determinacy and E-stability in a closed economy to this small open economy framework. Our results highlight an important link between the Taylor principle and both determinacy and learnability of equilibrium in small open economies. More importantly, the degree of openness coupled with the nature of the policy rule adopted by the monetary authorities might change this link in important ways. A key finding is that, contrary to Bullard and Mitra, expectations-based rules that involve the CPI and/or the nominal exchange rate limit the region of E-stability and the Taylor Principle does not guarantee E-stability. We also show that some forms of managed exchange rate rules can help to alleviate problems of both indeterminacy and expectational instability, yet these rules might not be desirable since they promote greater volatility in the economy.
Does It Matter How People Speak?
Authors: Chong Alberto E.
Published: March 2024

Language serves two key functions. It enables communication between agents, which allows for the establishment and operation of formal and informal institutions. It also serves a less obvious function, a reassuring quality more closely related to issues linked with trust, social capital, and cultural identification. While research on the role of language as a learning process is widespread, there is no evidence on the role of language as a signal of cultural affinity. I pursue this latter avenue of research and show that subtle language affinity is positively linked with change in earnings when using English-speaking data for cities in the Golden Horseshoe area in Southern Ontario during the period 1991 to 2001. The results are robust to changes in specification, a broad number of empirical tests, and a diverse set of outcome variables.
Monetary Policy Challenges in Emerging Markets: Sudden Stop, Liability Dollarization, and Lender of Last Resort
Authors: Calvo Guillermo A.
Published: March 2024

The paper argues that Emerging Market economies (EMs) face financial vulnerabilities that weaken the effectiveness of a domestic Lender of Last Resort (LOLR). As a result, monetary policy is inextricably linked to the state of the credit market. In particular, the central bank should be ready to operate as LOLR during Sudden Stop (of capital inflows) by releasing international reserves in an effective manner. These conditions also impact on optimal monetary policy in normal but high-volatility periods. The paper further argues that during those periods interest rate rules may engender excessive volatility of exchange rates and, thus, that it may be advisable to temporarily supplement those rules by foreign exchange market intervention or outright exchange rate pegging. At a fundamental level, the analysis suggests that the state-of-the-art literature summarized by Woodford (2003) or even more heterodox approaches exemplified by Stiglitz and Greenwald (2003) are likely fall short of providing a satisfactory guide for monetary policy in EMs.
Self-Fulfilling Debt Crises in Theory and Practice
Authors: Villemot Sébastien , Cohen Daniel
Published: March 2024

This paper analyzes econometrically how a country's post-crisis debt ratio could be forecast, in the aftermath of a debt crisis, from the previous debt-to-GDP ratio. A critical parameter is simply the debt-to-PPP-GDP ratio, where PPP-GDP is, in current international dollars, the Summers-Heston value. In this formulation, this paper shows that the Latin American paradox disappears. This then leads to a simple conclusion: debt crises are more frequent in Latin American countries because they have more damaging consequences on the market value of GDP. This itself appears to be closely related to the fact that pre-crisis Latin American exchange rates are also overvalued (for a similar emphasis, see Calvo et al., 2003). As a simple consequence of this model, the paper suggests computing the debt-to-PPP-GDP ratio as a new standard for analyzing debt sustainability.
Traditional Excluding Forces: A Review of the Quantitative Literature on the Economic Situation of Indigenous Peoples, Afro-Descendants, and People Living with Disability
Authors: Ripani Laura , Gandelman Néstor , Ñopo Hugo R.
Published: March 2024

Unequal income distribution in Latin America and the Caribbean is linked to unequal distributions of (human and physical) assets and differential access to markets and services. These circumstances, and the accompanying social tensions, need to be understood in terms of traditional fragmenting forces; the sectors of the population who experience unfavorable outcomes are also recognized by characteristics such as ethnicity, race, gender and physical disability. In addition to reviewing the general literature on social exclusion, this paper surveys several more specific topics: i) relative deprivation (in land and housing, physical infrastructure, health and income); ii) labor market issues, including access to labor markets in general, as well as informality, segregation and discrimination; iii) the transaction points of political representation, social protection and violence; and iv) areas where analysis remains weak and avenues for further research in the region.
Challenges of Exporting Differentiated Products to Developed Countries: The Case of SME-Dominated Sectors in a Semi-Industrialized Country
Authors: Friel Daniel , Hallak Juan Carlos , Artopoulos Alejandro
Published: March 2024

This paper surveys four Argentinean industrieslight ships, television programs, wines, and wooden furniturethat have experienced substantial export growth in recent years, particularly to developed countries. The case studies first describe the structure of the industries, then characterize the emergence of export pioneers and the subsequent process of diffusion. Finally, they analyze the role played by public institutions. Across sectors, the appearance of a pioneer is largely explained by a knowledge advantage relative to other industry participants regarding foreign markets, which the pioneer acquired previously and independently of his decision to export. Diffusion occurs across as well as within sectors, as pioneers knowledge is relevant to other industries. Since diffusion does not necessarily hurt the pioneer, public policy has a potentially important role in fostering diffusion within and across sectors.
Globalization, Product Differentiation and Wage Inequality
Authors: Straume Odd Rune , Bastos Paulo
Published: March 2024

This paper develops a two-country, general equilibrium model of oligopoly in which the degree of horizontal product differentiation is endogenously determined by rms strategic investments in product innovation. Consumers seek variety and product innovation is more skill intensive than production. Stronger import competition increases innovation incentives, and thereby the relative demand for skill. An intraindustry trade expansion following trade liberalization can therefore increase wage inequality between skilled and unskilled workers. In addition, since product differentiation is resource consuming, freer trade entails a potential trade-off between production and variety. The import competition effect highlighted by the model, which plays a key role in determining the general equilibrium, is consistent with panel data on Chilean manufacturing plants.
Innovation, R&D Investment and Productivity: Uruguayan Manufacturing Firms
Authors: Ramada Magdalena , Cassoni Adriana
Published: March 2024

Uruguays inability to sustain high levels of economic growth cannot be fully explained by external shocks, the prevailing institutional setting or the level of human capital accumulation. Instead, low investment in knowledge capital stands as a most likely explanation. This hypothesis is supported by empirical evidence analyzed in this study. Returns on innovation were found to be significant, promoting a non-negligible acceleration of labor productivity gains. However, the propensity to innovate and the intensity of the effort expended critically depend on the firms already having a high internal efficiency level. As firms behavior is differentiated depending on the type of innovation output pursued, the significantly higher frequency of processes relative to product-innovative firms is matched by the larger impact of novel processes with respect to products on labor productivity. However, the degree of novelty of process innovation is significantly inferior to that of product innovation. The research points to inadequate choices of input mixes as the underlying cause. Policy recommendations center on finding adequate channels to generate and disseminate information on the optimal input mixes depending on the type of innovation output sought.
Innovation and Productivity in the Argentine Manufacturing Sector
Authors: Arza Valeria , López Andrés
Published: March 2024

This paper adapts the Crepon, Duguet, and Mairesse (1998) approach to estimate the relationship between innovation and productivity and the realities of innovative activities in developing countries. Panel data for Argentina during the period 1998-2004 to estimate a structural model in which different types of firms` innovative behaviorincluding in-house activities and the incorporation of external technologiesfeeds into the probability of achieving successful results in product and process innovation, which in turn explains labor productivity. The endogeneity of this three-stage process is controlled for. The results suggest that all types of innovative activities are relevant to explain success in product and process innovation, and both are important factors to explain labor productivity. Moreover, investing systematically in R&D implies an extra payoff in labor productivity. These results suggest that investing in different types of innovative activitiesand not only in R&Dand doing in-house activities systematically contribute to firms` innovative and economic performance.
The Role of Relative Price Volatility in the Efficiency of Investment Allocation
Authors: León John Jairo , Cavallo Eduardo A. , Galindo Arturo , Izquierdo Alejandro
Published: March 2024

This paper estimates the impact of relative price volatility on sector-level investment allocation using a panel of 65 countries with data for 26 manufacturing industries over the period 1985-2003. Results indicate that volatility distorts efficient investment allocation in that investment is not necessarily devoted to relatively more productive sectors, especially in emerging market economies that are highly exposed and may lack the necessary institutions to deal with it successfully. This is evidence in support of theories suggesting that relative price volatility provides incentives for entrepreneurs to adopt more malleable but less productive production technologies, enabling them to accommodate more easily abrupt and frequent changes in relative prices, but at the cost of using less productive technologies.
Crime Victimization and Income Distribution
Authors: Schargrodsky Ernesto , Galiani Sebastián , Di Tella Rafael
Published: March 2024

Crime levels have risen significantly in Argentina during recent years. In this study, we analyze the relationship between crime victimization and income distribution.
Managing Economic Exposures of Natural Disasters: Exploring Alternative Financial Risk Management Opportunities and Instruments
Authors: Andersen Torben
Published: March 2024

The report makes a general assessment of the need for catastrophe risk transfer in Latin America and the Caribbean. It analyzes different ways in which risk transfer can take place in the form of conventional reinsurance contracts as well as newer derivative instruments and risk-linked securities.
Trade Policy and Export Diversification: What Should Colombia Expect from the FTA with the United States
Authors: Volpe Martincus Christian , Gómez Sandra Milena
Published: March 2024

According to the economic theory and recent empirical evidence, improved market access through trade arrangements is likely to favor export diversification. In this paper, we assess whether this has been the case of Colombian exports to the United States and whether an FTA with the United States would help Colombia to diversify their exports. We find that lower tariffs have indeed favored exports of new products from Colombia. Predictions suggest that the FTA is likely to induce further diversification, but up to a certain point.
Logistics, Transport and Food Prices in LAC: Policy Guidance for Improving Efficiency and Reducing Costs
Authors: Guasch José Luis , Schwartz Jordan , Wilmsmeier Gordon
Published: March 2024

Second Meeting of the Finance Minister of the Americas and the Caribbean
Mexican Microenterprise Investment and Employment: The Role of Remittances
Authors: Woodruff Christopher
Published: March 2024

Using data from Mexican surveys of Microenterprises conducted between 1992 and 1998, we examine the association between migration to the US and investment in microenterprises, the use of paid and unpaid labor, and the earnings of micro entrepreneurs. We find that investments in microenterprises are positively associated with migration rates and that in enterprises owned by females, migration is also associated with greater use of unpaid labor. For males, the connection between migration and the log of invested capital grew much stronger during the 1990s. Given the rapid increase in out-migration and remittance flows during the 1990s, this is consistent with expectations. These results apply to the migration rate of the microenterprise owner's state of birth, regardless of his/her current state of residence, and hold when current migration rates are instrumented for using historical migration rates. Kernel densities show that entrepreneurs born in high migration regions in Mexico have higher earnings.
Remittances and Healthcare Expenditure Patterns of Populations in Origin Communities: Evidence from Mexico
Authors: Amuedo-Dorantes Catalina , Sainz Tania , Pozo Susan
Published: March 2024

Workers's remittances to Mexico represent one of Mexico's most important sources of foreign income, only second to petroleum sales. This paper attempts to measure the elasticity or responsiveness of healthcare use to remittances. Do remittances increase healthcare use by a large or a small percent? Is the responsiveness of healthcare use to remittances dependent on the type of healthcare being sought-whether it is for financing routine healthcare purchases, or hospitalization? This study may help inform Mexican policy-makers on the role of the repatriated incomes from Mexican migrants in the US in affecting healthcare expenses of family members left back home.
The Impact of Funding on Research Collaboration: Evidence from Argentina
Authors: Maffioli Alessandro , Ubfal Diego
Published: March 2024

In this paper, we evaluate the impact of research grants on the amount of collaboration, among scientific researchers in Argentina. We find a positive and significant impact of funding on collaboration, which is measured in terms of the number of co-authors for publications in peer-reviewed journals. In particular, we find a significant impact of the grants for funded researchers both on the size of their ego network, and on their 2-step indirect links, measured by the number of direct and 1-step indirect co-authors. We also find evidence that this impact was driven by the results of funded researchers at the upper tail of the distribution of collaboration outcomes.
Off-Budget Operations: Report
Authors: Jul Ana María
Published: March 2024

This study assesses the planning, implementation, programming, budgeting and evaluation of extra budgetary and tax expenditures for Brazil, Chile, Ecuador and Mexico. The off-budget operations of these countries were analyzed against the best practices guidelines defined by the OECD on Off-budget and Tax Expenditures, Budget Transparency, and Corporate Governance of State-Owned Enterprises, as well as the recommendations included in the IMF's fiscal ROSCs. This report was presented at Public Policy Management and Transparency Network's Meeting on Development Effectiveness and Result-Based Budget Management held on May 8th and 9th, 2006 in Washington DC.
Does Technical Assistance Matter?: An Impact Evaluation Approach to Estimate its Value Added
Authors: Ruprah Inder J. , Marcano Luis
Published: March 2024

Many public programs and operations by multilateral organisations include technical assistance to the direct beneficiaries of the program in addition to pure financing. However, there is no substantial body of studies that calculates the additional impact; in the sense of exclusively attributable to, of technical assistance on the outcome of interest of the program. In this working paper, the authors propose the use of multi-treatment impact evaluation method -propensity score combined with exact matching for dosage and double difference- for estimating technical assistance's impact. The two cases examined in this study correspond to the Neighbourhood Improvement Program (NIP) of Chile and the Social Investment Fund of Guatemala (SIF). Given the small dollar value of technical assistance relative to the dollar value of transfers not only does technical assistance matter but it is a way of getting more for less.
Policy Studies on Greenhouse Gas Mitigation and Economic Development: Synergies and Challenges
Authors: Morgenstern Richard D.
Published: March 2024

This report builds on three sector-specific case studies commissioned by the IDB that examined opportunities for GHG mitigation in urban transport, landfill management, and forestry. The three selected studies have a strong potential in regards to their ability to illustrate the links between GHG mitigation and broader development objectives. The report concludes with a series of crosscutting observations that focus on the broad nexus between GHG abatement and economic development in Latin America and the Caribbean, as well as the needs and opportunities for improved policy coordination and institutional strengthening.
Should Central Banks Target Happiness?: Evidence from Latin America
Authors: Luengas Pavel , Ruprah Inder J.
Published: March 2024

It has become common wisdom amongst monetary policy professionals that central banks in Latin America should adopt inflation targeting. Pure inflation targeting implicitly assumes a social loss welfare function dependent on only inflation. In this working paper, using subjective well-being survey data for Latin America the authors present evidence that both inflation and unemployment reduce wellbeing; where the cost of inflation in terms of unemployment, hence the relative size of the weights in a social well-being function, is about one to eight, almost double of that found for OECD countries. The evidence presented in this paper, combined with the low frequency of happiness data, may not be sufficiently convincing for central banks to adopt happiness-targeting rule. However, happiness data would be useful to inform policy makers regarding the optimal disinflation policy or at least allow consciousness of the potential discontent of different sub-groups of the population of different disinflation strategies.
Designing Decisions Rules for Transnational Infrastructure Projects
Authors: Barberá Salvador
Published: March 2024

This article discusses the implications of decision rules in the governance structures of transnational infrastructure projects. It stresses that decision rules strongly affect the performance of the partnership and that, consequently, attention should be given to their design at the initial stage. The article also stresses the fact that partners must not only agree on how to make ordinary decisions, but also special ones such as, for example, changing the rules along the way or making changes to the membership of the group. This paper makes the following specific points. First, the choice of partners is a key variable, which affects the choice of decision rules and, in turn, is influenced by the conditions for new entrants. Second, the choice of decision rules can crucially affect the degree of confidence and the level of cooperation among partners, as well as the speed at which the partnership adopts new decisions. Third, agreements on how to eventually change the initial set of rules and partners should be part of the design of a well established decision system.