nep-lam New Economics Papers
on Central and South America
Issue of 2010‒03‒06
five papers chosen by
Maximo Rossi
University of the Republic

  1. Trade Liberalization, Inequality and Poverty in Brazilian States By Marta Castilho; Marta Menéndez; Aude Sztulman
  2. The Impact of International Trade Flows on the Growth of Brazilian States By Marie Daumal; Selin Ozyurt
  3. SMEs and Regional Economic Growth in Brazil By Túlio A. Cravo; Adrian Gourlay; Bettina Becker
  4. Does Conflict Disrupt Growth? Evidence of the Relationship between Political Instability and National Economic Performance By Polachek, Solomon; Sevastianova, Daria
  5. Effects of Reserve Requirements in an Inflation Targeting Regime: The Case of Colombia By Hernando Vargas Herrera; Carlos Varela; Yanneth R. Betancourt; Norberto Rodríguez

  1. By: Marta Castilho (Universidade Federal Fluminense, Rio de Janeiro, Brazil); Marta Menéndez (Université Paris-Dauphine, LEDa-DIAL, Paris - Paris School of Economics); Aude Sztulman (Université Paris-Dauphine, LEDa-DIAL, Paris)
    Abstract: This paper studies the impact of trade liberalization and international trade on household income inequality and poverty using detailed micro-data across Brazilian states, from 1987 to 2005. Results suggest that Brazilian states that were more exposed to tariff cuts experienced smaller reductions in household poverty and inequality. If significance of results on Brazilian states depends on the choice of poverty and inequality indicators, robust and contrasting results emerge when we disaggregate into rural and urban areas within states. Trade liberalization contributes to poverty and inequality increases in urban areas and may be linked to inequality declines in rural areas (no significant effect is found for rural poverty). In terms of observed integration to world markets, import penetration plays a similar role as trade liberalization for Brazilian states as a whole. On the contrary, rising export exposure appears to have significantly reduced both measures of household welfare. _________________________________ Cet article étudie l’impact de la libéralisation commerciale et du commerce international sur les inégalités de revenu et le niveau de pauvreté des ménages au sein des états brésiliens, à partir de données individuelles sur la période 1987-2005. D’après l’étude économétrique, les états brésiliens, davantage touchés par la libéralisation commerciale, ont connu de plus faibles réductions des inégalités ou de la pauvreté. Pour les états brésiliens dans leur ensemble, la significativité des résultats dépend du choix des indicateurs de pauvreté et d’inégalité mais, dès lors que l’on distingue les zones rurales et urbaines au sein des états, les effets sont robustes et contrastés. En zone urbaine, la libéralisation commerciale aurait contribué à accroître les niveaux de pauvreté et d’inégalité, tandis qu’elle entraînerait une diminution des inégalités en zone rurale (aucun impact significatif n’est observé sur la pauvreté rurale). En termes d’insertion des états brésiliens dans le commerce international, une hausse du taux de pénétration des importations joue dans le même sens que la libéralisation commerciale. Mais la propension à exporter d’un état contribuerait à réduire tant la pauvreté que les inégalités de revenu.
    Keywords: Trade liberalization, poverty and inequality; Brazilian states, Libéralisation commerciale, pauvreté et inégalités, états brésiliens.
    JEL: D31 F16 F14
    Date: 2009–12
  2. By: Marie Daumal (Université Paris 8 Vincennes-Saint-Denis, Université Paris-Dauphine, LEDa, UMR DIAL); Selin Ozyurt (Université Paris-Dauphine)
    Abstract: The aim of this paper is to explore the impact of Brazil’s trade openness on regional inequalities by estimating the effect of international trade flows on growth of Brazilian states, depending on their income level. For this purpose, we run dynamic growth regressions, using the system GMM estimator, on a panel data set including 26 Brazilian states for the 1989 - 2002 period. Growth rates of Brazilian states are regressed on control variables and on Brazilian states’ trade openness variables. All variables vary across both states and year. The results indicate that trade openness benefits more the Brazilian states with higher levels of per capita income, thereby tending to increase regional inequalities in Brazil. Besides, we find that trade openness advantages more the states with a good level of human capital as well as the industrialized states rather than the states whose main activity is agriculture. The problem that this study reveals is that international trade seems to provide additional advantages to already well developed Brazilian states while one of the priorities of the Brazilian federal government is to achieve a better territorial balance in Brazil. _________________________________ Ce travail a pour objectif d’estimer l’impact des flux de commerce international sur la croissance des Etats brésiliens. A l’aide de l’estimateur GMM, le taux de croissance des Etats brésiliens est régressé sur divers déterminants de la croissance et sur leur taux d’ouverture commerciale. La base de données en panel contient les 26 Etats brésiliens sur la période 1989 - 2002. Les estimations de l’équation de croissance montrent que les flux de commerce international des Etats favorisent davantage la croissance des Etats riches que celle des Etats les moins développés. Nous montrons également qu’il existe au Brésil une convergence conditionnelle. Les Etats pauvres ont un taux de croissance plus élevé que les Etats riches mais il semble que leurs états stationnaires soient très différents les uns des autres, ce qui nous amène à penser que les inégalités régionales resteront importantes dans l’avenir.
    Keywords: International trade, growth equation, GMM estimator, Brazilian states, Commerce international, équation de croissance, estimateur GMM, Etats brésiliens.
    JEL: F43 R11
    Date: 2010–01
  3. By: Túlio A. Cravo (Dept of Economics, Loughborough University); Adrian Gourlay (Dept of Economics, Loughborough University); Bettina Becker (Dept of Economics, Loughborough University)
    Abstract: This paper examines the relationship between the Small and Medium Enterprise (SME) sector and economic growth for an annual panel of Brazilian states for the period 1985-2004. We investigate the importance of the relative size of the SME sector measured by the share of the SME employment in total formal employment and the level of human capital in SMEs measured by the average years of schooling of SME employees. The empirical results indicate that the relative importance of SMEs is negatively correlated with economic growth, a result that is consistent with previous studies examining developing countries. In addition, our results also show that human capital embodied in SMEs may be more important for economic growth than the relative size of the SME sector.
    Keywords: Firm size, market structure, economic growth, human capital.
    JEL: O1 O15 L1
    Date: 2010–01
  4. By: Polachek, Solomon (Binghamton University, New York); Sevastianova, Daria (University of Southern Indiana)
    Abstract: Current empirical growth models limit the determinants of country growth to geographic, economic, and institutional variables. This study draws on conflict variables from the Correlates of War (COW) project to ask a critical question: How do different types of conflict affect country growth rates? It finds that wars slow the economy. Estimates indicate that civil war reduces annual growth by .01 to .13 percentage points, and high-intensity interstate conflict reduces annual growth by .18 to 2.77 percentage points. On the other hand, low-intensity conflict slows growth much less than high-intensity conflict, and may slightly increase it. The detrimental effect of conflict on growth is intensified when examining non-democracies, low income countries, and countries in Africa.
    Keywords: war, economic growth, conflict
    JEL: C2 O1 O47 O57 P47 P52
    Date: 2010–02
  5. By: Hernando Vargas Herrera; Carlos Varela; Yanneth R. Betancourt; Norberto Rodríguez
    Abstract: The Colombian economy and financial system have coped reasonably well with the effects of the global financial crisis. Hence, “unconventional” policy measures have not been at the center of the policy decisions and discussions. Nominal short term interest rates have remained the main monetary policy tool and “Quantitative easing” measures have not been central in the policy response. The one “unconventional” monetary instrument used by the Central Bank in Colombia has been changes in reserve requirements (RR) on financial system deposits. Interestingly, they were adopted before the global financial crisis, as a reaction to domestic credit conditions. The effects of RR on interest rate and interest rate pass-through in an inflation targeting regime are not as straightforward as those under a monetary targeting regime. Conceptually, those effects depend on the degree of substitution between deposits and central bank credit as sources of funds for banks and on the extent to which RR changes affect the risks facing banks. The empirical results for Colombia suggest that RR are important long run determinants of business loan interest rates and have been effective in strengthening the pass-through from policy to deposit and lending interest rates.
    Date: 2010–02–11

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