New Economics Papers
on Central and South America
Issue of 2008‒09‒13
five papers chosen by

  1. What we can learn from a comparison of the schooling systems of South Africa and Argentina By Martin Gustafsson; Alejandro Morduchowicz
  2. The measurement of inequality of opportunity : theory and an application to Latin America By Ferreira , Francisco H. G.; Gignoux, Jeremie
  3. Latin America and the social contract : patterns of social spending and taxation By Breceda, Karla; Rigolini, Jamele; Saavedra, Jaime
  4. Household investment under violence - the Colombian case By Grun, Rebekka E.
  5. Safeguards and antidumping in Latin American trade liberalization By Finger, J. Michael; Nogues, Julio J.

  1. By: Martin Gustafsson (Department of Economics, University of Stellenbosch); Alejandro Morduchowicz (International Institute for Educational Planning, Buenos Aires)
    Abstract: An existing accounting framework to describe an education system is elaborated and used as a framework for understanding and comparing the resource allocation policies of the South African and Argentinean schooling systems. The comparison highlights how, by paying fewer teachers more (relative to GDP per capita), South Africa is structurally forced to deal with relatively large class sizes. Both countries have attempted to use production function studies to understand ways of improving pupil performance, and in both countries the utilisation of education human resources appears particularly important. The economic case for expanding secondary schooling is perhaps not as strong as the policies, especially those in Argentina, suggest. Whilst rates of return to secondary schooling do not appear to offer concrete policy direction, a cross-country analysis that takes into account a secondary school completion ratio (a statistic calculated for this analysis) suggests that more policy emphasis should go towards improving the quality of secondary schooling.
    Keywords: South Africa, Argentina, education policy, education financing, school, education, secondary school, educational quality
    JEL: D20 H52 I22
    Date: 2008
  2. By: Ferreira , Francisco H. G.; Gignoux, Jeremie
    Abstract: What part of the inequality observed in a particular country is due to unequal opportunities, rather than to differences in individual efforts or luck? This paper estimates a lower bound for the opportunity share of inequality in labor earnings, household income per capita and household consumption per capita in six Latin American countries. Following John Roemer, the authors associate inequality of opportunity with outcome differences that can be accounted for by morally irrelevant pre-determined circumstances, such as race, gender, place of birth, and family background. Thus defined, unequal opportunities account for between 24 and 50 percent of inequality in consumption expenditure in the sample. Brazil and Central America are more opportunity-unequal than Colombia, Ecuador, or Peru."Opportunity profiles,"which identify the social groups with the most limited opportunity sets, are shown to be distinct from poverty profiles: ethnic origin and the geography of birth are markedly more important as determinants of opportunity deprivation than of outcome poverty, particularly in Brazil, Guatemala, and Peru.
    Keywords: Inequality,Rural Poverty Reduction,Access to Finance,Equity and Development,Services&Transfers to Poor
    Date: 2008–07–01
  3. By: Breceda, Karla; Rigolini, Jamele; Saavedra, Jaime
    Abstract: This paper presents an incidence analysis of both social spending and taxation for seven Latin American countries, the United Kingdom, and the United States. The analysis shows that Latin American countries are headed de facto toward a minimalist welfare state similar to the one in the United States, rather than toward a stronger, European-like welfare state. Specifically, both in Latin America and in the United States, social spending remains fairly flat across income quintiles. On the taxation side, high income inequality causes the rich to bear most of the taxation burden. This causes a vicious cycle where the rich oppose the expansion of the welfare state (as they bear most of its burden without receiving much back), which in turn maintains long-term inequalities. The recent increased socioeconomic instability in many Latin American countries shows nonetheless a real need for a stronger welfare state, which, if unanswered, may degenerate into short-term and unsustainable policies. The case of Chile suggests that a way out from this apparent dead end can be found, as elites may be willing to raise their contribution to social spending if this can lead to a more stable social contract.
    Keywords: ,Public Sector Economics&Finance,Taxation&Subsidies,Economic Theory&Research,Services&Transfers to Poor
    Date: 2008–04–01
  4. By: Grun, Rebekka E.
    Abstract: Households in rural Colombia are confronted with a variety of violent threats: attacks and displacement threats by guerrillas and paramilitaries, gang violence among drug traffickers, and high common delinquency. In this context, households have to adjust their day-to-day decisions, including saving and portfolio choices, in order to be less vulnerable. The authors test the hypothesis that households, when confronted with exogenous violence, reduce their investment and, moreover, shift it from fixed to mobile assets, which would be safer in the case of displacement, and choose the opposite strategy under higher common delinquency associated with property crimes. Empirical evidence from a rich Colombian micro-data set strongly supports the hypothesis. The results shed new light on the economic impact of violence. The immediate reduction in capital stock might be much less severe than more permanent damage via the savings function. This has implications for the appropriate political answer to chronic violence in Colombia as well as in other areas of chronic conflict.
    Keywords: Economic Theory&Research,Investment and Investment Climate,Access to Finance,Bankruptcy and Resolution of Financial Distress,Public Sector Corruption&Anticorruption Measures
    Date: 2008–09–01
  5. By: Finger, J. Michael; Nogues, Julio J.
    Abstract: The binding of tariff rates and adoption of the General Agreement on Tariffs and Trade/World Trade Organization-sanctioned safeguards and antidumping mechanisms provided the basis to remove a multitude of instruments of protection in the Latin American countries discussed in this paper. At the same time, they helped in maintaining centralized control over the management of pressures for protection in agencies with economy-wide accountabilities. The World Trade Organization's procedural requirements (for example, to follow published criteria, or participation by interested parties) helped leaders to change the culture of decision-making from one based on relationships to one based on objective criteria. However, when Latin American governments attempted to introduce economic sense - such as base price comparisons on an economically sensible measure of long-run international price rather than the more generous constructed cost concept that is the core of WTO rules - protection-seekers used the rules against them. They pointed out that World Trade Organization rules do not require the use of such criteria, nor do procedures in leading users (industrial countries) include such criteria. In sum, the administrative content of the rules supported liberalization; the economic content did not.
    Keywords: Economic Theory&Research,Free Trade,Trade Law,Emerging Markets,Trade Policy
    Date: 2008–07–01

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