New Economics Papers
on Central and South America
Issue of 2009‒08‒02
four papers chosen by

  1. Three Decades of Neoliberal Economics in Chile: Achievements, Failures and Dilemmas By Solimano, Andres
  2. Crisis in Latin America : infrastructure investment, employment and the expectations of stimulus By Schwartz, Jordan Z.; Andres, Luis A.; Dragoiu, Georgeta
  3. School Choice in Chile: Looking at the Demand Side By Francisco Gallego; Andrés Hernando
  4. FORTY YEARS OF LATIN AMERICA’S ECONOMIC DEVELOPMENT: From the Alliance for Progress to the Washington Consensus By Sebastian Edwards

  1. By: Solimano, Andres
    Abstract: The Chilean development story of the last two to three decades is a mix of successes in the macro, growth, poverty and trade fronts but also of failure in reducing chronic inequality of income and wealth. In addition, the current growth patterns have serious impacts on the environment, natural resources and energy demand. Adverse features of the Chilean development model include urban insecurity and rising crime, pollution, pressure on natural resources, congestion and social stratification in access to education, health and pensions. A reduction in social inequality would require changes in several fronts: more public-sector resources devoted to education; curtailing current concentration of wealth and market shares in banking, retail trade, and private pensions systems, private health provision, and other sectors; more effective regulation of big business; rebalancing of labour unions. bargaining power capacities and effective support to the sector of small and medium size enterprises. Chilean democracy would benefit from a redefinition in development priorities towards less power for the dominant elites (economic and political) and broader social participation for the middle class and the working people to support dynamic and more equitable
    Keywords: Chile, development, inequality, growth, natural resources, social policy, middle class
    Date: 2009
  2. By: Schwartz, Jordan Z.; Andres, Luis A.; Dragoiu, Georgeta
    Abstract: Infrastructure investment is a central part of the stimulus plans of the Latin American and the Caribbean (LAC) region as it confronts the growing financial crisis. This paper estimates the potential effects on direct, indirect, and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable - averaging around 40,000 annual jobs per US$1billion in LAC, depending upon such variables as the mix of subsectors in the investment program; the technologies deployed; local wages for skilled and unskilled labor; and the degrees of leakages to imported inputs. While these numbers do not account for substitution effect, they are built around an assumed"basket"of investments that crosses infrastructure sectors most of which are not employment-maximizing. Albeit limited in scope, rural road maintenance projects may employ 200,000 to 500,000 annualized direct jobs for every US$1billion spent. The paper also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability, and corruption.
    Keywords: Transport Economics Policy&Planning,,Banks&Banking Reform,Non Bank Financial Institutions,Debt Markets
    Date: 2009–07–01
  3. By: Francisco Gallego (Instituto de Economía. Pontificia Universidad Católica de Chile.); Andrés Hernando
    Abstract: How do parents choose among schools when they are allowed to do so? In this paper, we analyze detailed information of 70,000 fourth-graders attending about 1,200 publicly subsidized schools in the context of the Chilean voucher system. We model the school choice of a household as a discrete choice of a single school, based on the random utility model developed by McFadden (1974) and the specification of Berry, Levinsohn, and Pakes (1995), which includes choice-specific unobservable characteristics and deals with potential endogeneity. Our results imply that households value some attributes of schools, with the two most important dimensions being test scores and distance to school. Interestingly, at the same time, our results suggest there is a lot of heterogeneity in preferences because the valuation of most school attributes depend on household characteristics. In particular, we find that while proximity to school is an inferior attribute, test scores is a normal attribute. We present evidence that our results are mainly driven by self-selection and not by school-side selection. As a nal check, we compute the average enrollment elasticity with respect to all school attributes and find that higher elasticities are correlated with higher supply of the attribute, especially in the case of test scores-enrollment elasticities for private schools.
    Keywords: School choice, Chile, Vouchers, Structural Estimates, Parental Preferences.
    JEL: I20 I21 I22 I28
    Date: 2009
  4. By: Sebastian Edwards
    Abstract: In this paper I analyze the evolution of economic and social conditions in Latin America from the 1950s through the 1980s, when deep external crises erupted in country after country. The point of departure of our story is the political awakening of the region in the late 1950s and early 1960s and the emergence of guerilla movements in many countries, including in Cuba. I then analyze the Alliance for Progress, a major and ambitious aid program sponsored by the United States whose main objective was to improve social conditions in the region. I show that in spite of the Alliance, social circumstances did not improve significantly; I also show that throughout this period protectionism and government intervention became more ingrained, discouraging productivity improvements. I then deal with inflation, fiscal largesse, and the Mexican debt crisis of 1982, a crisis that led to the so-called “lost decade.†The paper ends with a discussion of the launching of the reforms of the Washington Consensus in 1989-1990. I provide a detailed analysis of the most important elements of this consensus, and I touch on some of the implementation challenges.
    JEL: F30 F32 N26 O40 O54
    Date: 2009–07

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