New Economics Papers
on Central and South America
Issue of 2012‒10‒13
eight papers chosen by

  1. Regional competitiveness: Latin America and the Caribbean By Lourdes Gabriela Daza Aramayo; Marek Vokoun; Milan Damborsky
  2. China’s Emergence in the World Economy and Business Cycles in Latin America By Ambrogio Cesa-Bianchi; M. Hashem Pesaran; Alessandro Rebucci; TengTeng Xu
  3. Rural-urban differences in educational outcomes: Evidence for Colombia using PISA microdata By Sandra Nieto; Raul Ramos; Juan Carlos Duque
  4. Egalitarian aid. The impact of aid on Latin American inequality. By González, Mariano; Larrú, José María
  5. Sovereign Credit Risk in Latin America and Global Common Factors By Manuel Agosin Trumper; Juan Díaz Maureira
  6. Explaining the Transition Probabilities in the Peruvian Labor Market By José Rodriguez; Gabriel Rodriguez
  7. Economic Residential Segregation and Educational Achievements: Evidence from Chile By Miguel Vargas Román
  8. The schooling repayment hypothesis for private transfers: Evidence from the PROGRESA/Oportunidades experiment By Carlos Chiapa; Laura Juarez

  1. By: Lourdes Gabriela Daza Aramayo; Marek Vokoun; Milan Damborsky
    Abstract: Regional Competitiveness can be defined as the region's potential in the long run enforce economically in competition with other regions while maintaining social cohesion and environmental sustainability. This ability is determined by many factors, such as innovation, technological progress, investment attractiveness, skills of the labor force, transportation infrastructure and quality of transport services, public sector efficiency and public security. These factors influence the resulting economic, social and environmental situation of the region. The authors have compared the competitiveness of Latin America and the Caribbean states. Indicators of GDP, unemployment rate, share of high-educated employees, the rate of migration, income, population, unemployment, delinquency, CO2 emissions were used for the evaluation. For the purposes of interpretation and due to imperfect data bases, small countries to 3 million are earmarked specifically together with the island states in the Antile states. Among the countries over 3 million inhabitants (the area of South America and Mexico) Mexico dominates, followed by Chile and Argentina. On the contrary, as the least competitive Colombia, Paraguay and Uruguay were evaluated. Mexico's dominance is mainly due to its position in the economic dimension. Mexico and Chile, by contrast, are better in environmental terms. The specific situation is in Bolivia, which reaches above the average in the social field (e.g. in the tertiary education) but lags in the economic sphere. Among the countries over 3 million inhabitants (the area of Central America) Costa Rica, Panama and Honduras show the best results. These countries have significant differences, and compared to countries located in the index below clearly have higher scores in the social field. Among the countries under 3 million inhabitants has the best positions St. Kitts and Nevis, followed by Cuba and the Bahamas. The problematic acquisition and data validation must be mentioned in the context of evaluation of these countries. The authors focused on selected factors of competitiveness rated best and worst of Latin American countries in the next section analysis. In this context, authors considered the economic liberalization, the role of technology in the economy, the position in international trade, education system, labor market and healthcare conditions, environment and transport infrastructure.
    Date: 2012–10
  2. By: Ambrogio Cesa-Bianchi; M. Hashem Pesaran; Alessandro Rebucci; TengTeng Xu
    Abstract: The international business cycle is very important for Latin America’s economic performance as the recent global crisis vividly illustrated. This paper investigates how changes in trade linkages between China, Latin America, and the rest of the world have altered the transmission mechanism of international business cycles to Latin America. Evidence based on a Global Vector Autoregressive (GVAR) model for 5 large Latin American economies and all major advanced and emerging economies of the world shows that the long-term impact of a China GDP shock on the typical Latin American economy has increased by three times since mid-1990s. At the same time, the long-term impact of a US GDP shock has halved, while the transmission of shocks from Latin America and the rest of emerging Asia (excluding China and India) GDP has not undergone any significant change. Contrary to common wisdom, we find that these changes owe more to the changed impact of China on Latin America’s traditional and largest trading partners than to increased direct bilateral trade linkages boosted by the decade-long commodity price boom. These findings help to explain why Latin America did so well during the global crisis, but point to the risks associated with a deceleration in China’s economic growth in the future for both Latin America and the rest of the world economy. The evidence reported also suggests that the emergence of China as an important source of world growth might be the driver of the so called “decoupling” of emerging markets business cycle from that of advanced economies reported in the existing literature.
    Keywords: International topics; Business fluctuations and cycles; Econometric and statistical methods; Regional economic developments; Recent economic and financial developments
    JEL: C32 F44 E32 O54
    Date: 2012
  3. By: Sandra Nieto; Raul Ramos; Juan Carlos Duque
    Abstract: Although there are hundreds of works using PISA microdata to analyse the determinants of educational outcomes, only a few of them have considered the relevance of geography. In this paper, we focus on the analysis of differences in educational outcomes between students in rural and urban schools. Previous studies on this topic started in the United States during the eighties and they have not arrived to a sound conclusion yet. Some authors do not find significant differences between rural and urban students while others find better outcomes for urban ones. It is not clear if this gap is explained by family characteristics or it is related to lower spending in rural schools. The policy debate on how public spending in education should be distributed between rural and urban areas in developing countries is very intense, although academic studies are scarce. However, during the last decades some studies have focused on some Latinamerican countries (Argentina, Peru, Brazil, Chile and Colombia), but again, there is no consensus on the factors behind the rural-urban gap in educational outcomes. Taking into account this background, we use microdata from the 2006 and 2009 PISA waves for Colombia. The Colombian case is particularly interesting from this perspective due to the structural changes suffered by this country during the last years, both in terms of political stability and educational reforms. The descriptive analysis of the data shows that the educational outcomes of urban students are higher than the rural ones in the three subjects covered by the PISA study: Mathematics, Reading and Science in both samples. In order to identify the factors behind this differential, we apply decomposition techniques that have been extensively in Labour Economics but not so much in the context of Economics of Education. In particular, in a first step we use the Oaxaca-Blinder decomposition and, next, we exploit the time variation of the data using the methodology proposed by Juhn-Murphy-Pierce. The results show that most part of the differential is related to family characteristics more than to school characteristics. From a policy perspective, the obtained evidence support actions addressed to improve family conditions and not so much to positive discrimination of rural schools. Keywords: educational outcomes, PISA, urban-rural differences JEL codes:J24, I25, R58
    Date: 2012–10
  4. By: González, Mariano; Larrú, José María
    Abstract: Literature on the relationship between aid and inequality is scarce and contradictory. Most studies are based on dynamic panel data using internal instruments to deal with endogeneity. In addition to these techniques, this article introduces the persistency of inequality and a double-censored Gini index. We apply for the first time a dynamic and double-censored panel data estimated applying the Simulated Maximum Likelihood method to a sample of 18 Latin American countries for 1990-2008. The main findings are that public expenditure in consumption and foreign direct investment had a positive effect on inequality whereas aid had a negative (egalitarian) effect. Neither taxes nor public social spending had a significant effect on inequality.
    Keywords: dynamic panel data; double censored panel data; inequality; foreign aid; Latin America
    JEL: F35 C23 C24
    Date: 2012–05
  5. By: Manuel Agosin Trumper; Juan Díaz Maureira
    Abstract: This paper studies the importance of global common factors in the evolution of sovereign credit risk in a group of emerging economies (15 countries in Latin America for which daily data are available on sovereign credit spreads and CDS quotations from the beginning of 2007 until February 2012). We arrive at three principal results. First, there is robust evidence for the existence of a common factor in the evolution of the two measurements of sovereign credit risk that we use. Second, the comovement between this common factor and our two measures of individual-country sovereign risk rose significantly after the bankruptcy of Lehman Brothers on September 15, 2008, widely regarded as the beginning of the most acute phase of the crisis. We interpret the results as evidence that changes in the availability of foreign capital to emerging economies is dependent less on developments that are internal to these economies than on international liquidity shocks and risk appetite, which in turn depend on global factors exogenous to the recipient economies. Third the long-run values of the measurements of sovereign risk conform to conventional notions of creditworthiness and are closely related to credit ratings. But even here, important credit events also affect long-run sovereign risk measurements.
    Date: 2012–09
  6. By: José Rodriguez (Departamento de Economía- Pontificia Universidad Católica del Perú); Gabriel Rodriguez (Departamento de Economía- Pontificia Universidad Católica del Perú)
    Abstract: El estudio tiene 2 objetivos. Primero establecer las principales características de la movilidad laboral; segundo analizar los determinantes de las principales transiciones entre los distintos estados de la ocupación. Para lograr el primer objetivo se utiliza matrices de transición que permiten analizar la dinámica de los mercados laborales y establecer los hechos estilizados de la movilidad laboral. Con relación al segundo objetivo, se ha modelado la pérdida de la ocupación utilizando regresiones logit de manera de poder identificar la importancia tanto de factores de demanda como de oferta. Para esto se utilizan muestras panel de las encuestas de hogares del período 2007-2010. Los resultados indican que existe un importante grado de movilidad entre los distintos estados, pero a nivel agregado estos movimientos tienden a cancelarse, con lo cual la distribución de la población a lo largo del tiempo en esos estados permanece constante. Con relación a la pérdida de ocupación, se ha logrado capturar el importante rol que cumplen las condiciones demanda.
    Keywords: Markovian transition probabilities, Peruvian labor markets logit models, employment.
    Date: 2012
  7. By: Miguel Vargas Román
    Abstract: Using a database from Chile, we have tested empirically the effects of economic residential segregation on educational achievements. Our hypothesis is based on literature’s findings about segregation’s negative impact on individuals’ well being. We found that segregation has negative impacts. This result would have interesting policy implications and goes in the opposite directions of those investigations’ findings, which indicate that segregation has just negligible effects. Keywords: Segregation, Education, Selection Bias JEL codes: R20, R29
    Date: 2012–10
  8. By: Carlos Chiapa (Colegio de Mexico); Laura Juarez (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))
    Abstract: This paper provides evidence on the schooling repayment motive for the private transfers that adult children give to their parents using data from the Mexican conditional cash transfer program PROGRESA/Oportunidades, which pays a transfer to parents for sending their children to school. We exploit the exogenous variation in the schooling grants received by the parental household, induced by the age of the child in 1997 and the year of treatment. Our results suggest that (i) there exists a repayment motive and (ii) that PROGRESA/Oportunidades is causing adult children to transfer less resources to their parents.
    Keywords: Schooling repayment hypothesis, intergenerational transfers, PROGRESA/Oportunidades
    JEL: D19 J18 J19
    Date: 2012

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