Toward a new international financial architecture: A practical post-Asia agenda

Latin America is together with Sub-Saharan Africa the most unequal region of the world. This paper documents recent inequality trends in the Latin American region, going beyond traditional measures of income inequality. The paper also reviews some of the explanations that have been put forward to understand the current situation, and discusses why reducing income inequality should be an important policy priority. In particular, the authors discuss channels through which inequality can affect growth and output volatility. On the whole, the analysis suggests a two-pronged approach to reduce inequality in the region that combines policies aimed at improving the distribution of assets (especially education) with elements aimed at improving the capacity of the state to redistribute income through taxes and transfers.

/pdf/inequality-in-latin-america-determinants-and-consequences-5detiqkas9.pdf

Inequality in Latin America : Determinants and Consequences

The social discount rate measures the rate at which a society would be willing to trade present for future consumption. As such it is one of the most critical inputs needed for cost-benefit analysis. This paper presents estimates of the social discount rates for nine Latin American countries. It is argued that if the recent track record in terms of growth in the region is indicative of future performance, estimates of the social discount rate would be in the 3-4 percent range. However, to the extent that the region improves on its past performance, the social discount rate to be used in the evaluation of projects would increase to the 5-7 percent range. The paper also argues that if the social planner gives a similar chance to the low and high growth scenario, the discount rate should be dependent on the horizon of the project, declining from 4.4 percent for a 25-year horizon to less than 4 percent for a 100-year horizon.

/pdf/the-social-discount-rate-estimates-for-nine-latin-american-5az72s9g2u.pdf

The social discount rate : estimates for nine Latin American countries

http://cejsh.icm.edu.pl/cejsh/element/bwmeta1.element.0eb75c01-cd41-3c1d-8702-7895c731db8d/c/181.pdf

THE RELATIONSHIP BETWEEN SAVINGS AND ECONOMIC GROWTH IN COUNTRIES WITH DIFFERENT LEVEL OF ECONOMIC DEVELOPMENT (Wspólzaleznosci miedzy oszczednosciami i wzrostem gospodarczym w krajach o róznym poziomie rozwoju gospodarczego)

The international mobility of people and elites is a main feature of the global economy of today. Immigration augments the labor force in receiving countries and provides many of the bodies and minds that are essential to any vibrant economy. This book is based on a blend of theory, varied country examples, and rich historical material ranging from the mid-nineteenth century to the early twenty-first century. It discusses the conceptual underpinnings of the push and pull factors of current migration waves and their impacts for development on the source and receiving countries. The analysis reviews the historical context under which various migration experiences have taken place - both in periods of internationalism and nationalism - in order to contribute to debates on the desirability of and tensions and costs involved in the current process of international migration.

International Migration in the Age of Crisis and Globalization

One of the controversies in growth analysis is the relative role of capital accumulation and productivity growth in driving output growth. As we interpret the evidence, discussed in this paper, part of the controversy on the role of capital accumulation in the growth process is due to the time span of the analysis (growth transitions versus steady states/long run growth). In fact, the empirical importance of various growth determinants will depend on what we want explain: long run growth, say growth over half a century or a century as different from growth dynamics over one or two decades. New evidence is showing that growth fluctuations at frequencies of a decade or so are very important part of the growth story for many developing countries. Growth is an irregular and volatile process in which the same country may experience shifts in growth regimes that can entail growth take-off and booms, stagnation and/or growth collapses. In this context, investment and savings become important variables whose determinants and dynamics we want to understand for designing public policies affecting positively the rate of economic growth.

Savings, investment and growth in the global age: analytical and policy issues

National savings and growth in Latin America have remained low in the 1990s and 2000s. The low level of national savings rates has forced Latin American countries to depend on foreign savings to finance investment and growth, which compounds the challenges for raising investment and growth prospects. This study extends the research on savings in three different dimensions: (1) in a time perspective, it extend the analysis on savings to the most recent years: we examine the period 1990-2003: (2) it examines the causality between savings, investment, and growth mostly uncovered in previous research on savings in Latin America; and (3) it examines the role of enterprises in the generation of national savings for several Latin American countries. We take a sample of nine Latin American countries. Our evidence showed that the main results found in the 1970s, 1980s and early 1990s regarding the factors associated with national savings also hold in the period 1990-2003. However, we found no evidence of association between national savings and the level of income (per capita GDP), dependency ratio, domestic interest rates, terms of trade, and income distribution. The relatively smaller size of our panel may explain the lack of correlation found in the cases of the income level and dependency ratio. The lack of correlation between national savings and the interest rates, terms of trade, and income distribution is in line with the ambiguous evidence found in the literature. Our evidence suggests a mutual causality between national savings and growth. Our results also suggest that households and the government appear to internalize the savings of enterprises. Further research aimed at compiling disaggregated series for the savings of households, enterprises, and the government would be required, however, to reach more definitive conclusions and policy implications.

Savings in Latin America after the mid 1990s: determinants, constraints and policies

Recent evidence on economic growth indicates that growth fluctuations at frequencies of a decade or so are at the centre of the Latin American countries'growth story. In this context, investment has played an important role as a source of growth, while national saving has been the main source of investment financing. Foreign saving has played a secondary role and has generally been substituted for national saving, rather than augmenting the total amount of savings available in Latin America. The high volatility and vulnerability to external swings exhibited by foreign capital have made foreign saving an unstable source of investment financing. This study on Latin America helps to provide a statistical framework for analysing the growth story of Latin America. Transitions affecting per capita GDP growth, investment and national and foreign savings rates are identified, as are common and country-specific transitions, based on comparisons of a sample group of eight Latin American countries with the Latin American and Caribbean region as a whole for the period 1960-2005. This research also helps to demonstrate that some growth episodes are not well captured by standard growth theories and econometric work developed and based on different economic contexts and time periods. The study confirms some general conclusions reached in the literature but provides evidence that raises doubts about others. Although growth needs to be sustained by higher investment rates, an initial impulse from investment is not required in order for growth to accelerate. It is not always the case that growth accelerations are accompanied by rising national savings rates; the latter may also decline. Foreign saving does not, in most cases, add to total saving (equal to investment), and the crowding out of national saving by foreign saving seems to be positively biased (being stronger when foreign saving is rising).

Economic growth in Latin America and the Caribbean: growth transitions rather than steady states

This research produced evidence about the contribution of investment and other sources to the growth process of Latin America during 1960-2002, and provided answers to the questions listed above unless from an historical perspective. The combined growth accounting and regression analysis, and used data for the six largest Latin American countries: Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela. These countries produce nearly 90 per cent of Latin America's GDP. Alternative growth accounting methodologies were used to measure the contributions of the sources of growth to GDP growth during 1960-2002. The study also provides evidence of the effects of investments in machinery and equipment and construction structures, and the effects of private and public investment on per capita GDP growth. The research found evidence of the primary role played by total factor productivity in explaining the difference between fast and slow growth experiences. Extending the traditional growth accounting approach did not change this conclusion. It also found that investment in machinery and equipment, and private investment were most effective in raising per capita GDP growth, but that key policy related variables, including education, were essential ingredients contributing to per capita GDP growth. Evidence of mutual causality between private investment and growth, and inconclusive evidence regarding the incidence of FDI and infrastructure on private investment were also found in this research.

Mario A. Gutiérrez

Papers

Savings, investment and growth in the global age: analytical and policy issues

Savings in Latin America after the mid 1990s: determinants, constraints and policies

Economic growth in Latin America and the Caribbean: growth transitions rather than steady states

Economic Growth in Latin America: The Role of Investment and Other Growth Sources

Savings, Investment and Capital Accumulation