2009-11-07 papers

on Central and South America

Issue of 2009‒11‒07
two papers chosen by

Drugs and Violence in Colombia: a VECM Analysis

By:	Tomás González; Ron P Smith (School of Economics, Mathematics & Statistics, Birkbeck)
Abstract:	It has been widely argued that the production of illegal drugs, particularly cocaine, has financed guerrilla activity in Colombia. This paper uses quarterly time-series data for Colombia 1994-2005 to examine the interaction between legal agricultural production, illegal agricultural production of drugs and the number of guerrilla attacks. The time series analysis suggests that drug production acts as a weakly exogenous stochastic trend which has a negative effect on legal agricultural production and a positive effect on guerrilla attacks; with a long-run elasticity of attacks to drug production very close to unity.
Date:	2009–06
URL:	http://d.repec.org/n?u=RePEc:bbk:bbkefp:0906&r=lam

The power of exports

By:	Easterly, William; Reshef, Ariell; Schwenkenberg, Julia
Abstract:	The authors systematically document remarkably high degrees of concentration in manufacturing exports for a sample of 151 countries over a range of 3,000 products. For every country manufacturing exports are dominated by a few"big hits"which account for most of the export value and where the"hit"includes both finding the right product and finding the right market. Higher export volumes are associated with higher degrees of concentration, after controlling for the number of destinations a country penetrates. This further highlights the importance of big hits. The distribution of exports closely follows a power law, especially in the upper tail. These findings do not support a"picking winners"policy for export development; the power law characterization implies that the chance of picking a winner diminishes exponentially with the degree of success. Moreover, given the size of the economy, developing countries are more exposed to demand shocks than rich ones, which further lowers the benefits from trying to pick winners.
Keywords:	Markets and Market Access,Economic Theory&Research,Access to Markets,Airports and Air Services,Tax Law
Date:	2009–10–01
URL:	http://d.repec.org/n?u=RePEc:wbk:wbrwps:5081&r=lam

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