nep-lam New Economics Papers
on Central and South America
Issue of 2014‒12‒19
eleven papers chosen by

  1. Green Growth in Mexico, Brazil and Chile: Policy strategies and future prospects By Nicole Grunewald; Inmaculada Martínez-Zarzoso
  2. Innovation and productivity in services: Empirical evidence from Latin America By Crespi G.A.; Tacsir E.; Vargas F.
  3. Productivity in services in Latin America and the Caribbean By Arias Ortiz E.; Crespi G.A.; Rasteletti A.; Vargas F.
  4. Endogenous Borrowing Constraints and Stagnation in Latin America By Restrepo-Echavarria, Paulina
  5. Bad Investments and Missed Opportunities? Capital Flows to Asia and Latin America, 1950-2007 By Ohanian, Lee E.; Restrepo-Echavarria, Paulina; Wright, Mark L. J.
  6. Is Access to Credit a Constraint for Latin American Enterprises? An Empirical Analysis with Firm-Level Data By Andrea Filippo Presbitero; Roberta Rabellotti
  7. Constitutional Rights and Education: An International Comparative Study By Sebastian Edwards; Alvaro Garcia Marin
  8. Credit constraints and business performance: evidence from public lending in Colombia By Marcela Eslava; Alessandro Maffioli; Marcela Meléndez
  9. Weather shocks and health at birth in Colombia By Andalon, Mabel; Azevedo, Joao Pedro; Rodriguez-Castelan, Carlos; Sanfelice, Viviane; Valderrama, Daniel
  10. Contracts Between Small Scale Soybean Farmers and the Biodiesel Industry in Brazil: An Application of Principal-Agent Model By Clemente, Felippe; da Silva Júnior, Aziz Galvão
  11. World Income Inequality Databases: An Assessment of WIID and SWIID By Jenkins, Stephen P.

  1. By: Nicole Grunewald; Inmaculada Martínez-Zarzoso (Georg-August-Universität Göttingen / Germany)
    Abstract: This research focuses on identifying the main policy strategies that could potentially contribute to the advance of three Latin American economies, namely Brazil, Chile and Mexico towards a green growth model that is social and inclusive, given the actual patterns of development of those economies. With this aim, we first identify and describe past and current policies in each country in terms of economic, social and environmental indicators. A detailed analysis follows for Brazil, Chile and Mexico, in which we propose a series of green growth indicators and choose a definition and classification of green growth sectors. We estimate an empirical model to explain the determinants of green house gas emissions and deforestation in Latin American countries. We broadly identify the sectors that contribute to its increase and describe the main green policies applied in each country. In turn we identify the sectors with higher potential for the future. Finally, we present policy recommendations and reflections for the future.
    Date: 2014–11–04
  2. By: Crespi G.A.; Tacsir E.; Vargas F. (UNU-MERIT)
    Abstract: This paper analyses and compares the determinants of innovation in the service industry and its impact on labour productivity at the firm level in three countries of Latin America Chile, Colombia, and Uruguay. The main findings show that, similar to what is observed in the manufacturing industry, service firms that invest the most in innovation activities are more likely to introduce changes or improvements in their production process and/or product mix, and those firms that innovate have higher labour productivity than non-innovative firms. Size was found to be a less relevant determinant of innovation in services than in manufacturing, suggesting that the need for infrastructure and associated sunk costs are lower in services. Conversely, cooperation was found to be far more important for innovation in services than in manufacturing, in line with the more interactive nature of innovation in services. Yet, large differences in statistical significance and size of the coefficients of explanatory variables among the countries studied suggest that the framework conditions where a firm operates have an important role in innovation decisions.
    Keywords: Microeconomic Analyses of Economic Development; Industrialization; Manufacturing and Service Industries; Choice of Technology; Innovation and Invention: Processes and Incentives; Technological Change: Choices and Consequences; Diffusion Processes; Economic Growth and Aggregate Productivity: General; Economywide Country Studies: Latin America; Caribbean;
    JEL: O12 O14 O31 O33 O40 O54
    Date: 2014
  3. By: Arias Ortiz E.; Crespi G.A.; Rasteletti A.; Vargas F. (UNU-MERIT)
    Abstract: This paper studies productivity in Latin America and the Caribbean, with an emphasis on the service sector. It shows that the low levels of productivity observed in the region are not only a consequence of low productivity at the firm level, but also of misallocation of workers across firms. These problems are more severe in services than in manufacturing. We also found that the determinants of productivity and employment growth at the firm level are different in manufacturing and services. Furthermore, results suggest that institutional factors might be important for determining productivity growth and resource allocation, as there are large differences across countries in the region in the effect of productivity on employment growth as well as on the speed at which less productive firms can close their productivity gaps.
    Keywords: Economic Growth and Aggregate Productivity: General; Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence; Economywide Country Studies: Latin America; Caribbean;
    JEL: O40 O47 O54
    Date: 2014
  4. By: Restrepo-Echavarria, Paulina (Federal Reserve Bank of St. Louis)
    Abstract: Latin America has had striking changes in economic performance over time. Following the recession and debt crises of the early 1980’s, consumption declined for about ten years and consumption per-capita in the year 2004 was roughly the same as it was in 1980. This paper studies consumption stagnation in Latin America using a small open economy real business cycle model with endogenous borrowing limits, capitalistic production and domestic productivity and international interest rate shocks. I find that the model does an excellent job matching the observed behavior of per-capita consumption, and that the interaction of both productivity and international interest rate shocks with the borrowing limit is key.
    Keywords: Limited Commitment; per-capita consumption; total factor productivity; interest rate.
    JEL: C61 E21 F41 F43
    Date: 2013–02–15
  5. By: Ohanian, Lee E. (Stanford University); Restrepo-Echavarria, Paulina (Federal Reserve Bank of St. Louis); Wright, Mark L. J. (Federal Reserve Bank of Chicago)
    Abstract: Theory predicts that capital should flow to countries where economic growth and the return to capital is highest. However, in the post-World War II period, per-capita GDP grew almost three times faster in East Asia than in Latin America, yet capital flowed in greater quantities into Latin America. In this paper we propose a 3-country 2-sector growth model, augmented by “wedges” to quantify and evaluate the importance of international capital market imperfections versus domestic imperfections in explaining this anomalous behavior of capital flows. We find that during the 1950’s capital controls where important, but domestic conditions dominate. And contrary to what has been thought, after 1960 capital controls in Asia encouraged borrowing.
    Keywords: Capital Flows; Return to Capital; East Asia; Latin America.
    JEL: F41 F42 F43 F44
    Date: 2013–11–25
  6. By: Andrea Filippo Presbitero (International Monetary Fund, Universit… Politecnica delle Marche - MoFiR); Roberta Rabellotti (Universit… di Pavia, Department of Political and Social Sciences)
    Abstract: An intense process of deregulation and financial liberalization in Latin America has increased competitive pressures and led to bank restructuring and consolidation. This paper looks at firm access to credit in the region, focusing on the role of credit market structure. Using firm-level data from theWorld Bank Enterprise Survey, we find that access to bank credit is very heterogeneous. On average, smaller and less productive firms are less likely to apply for credit and more likely to be financially constrained. We also find that a high degree of bank penetration and competition are significantly correlated with a lower probability that borrowers are financially constrained. Foreign banks penetration has a negative effect on access to credit particularly in less developed and more concentrated markets, while it has a positive influence in more competitive and financially developed markets.
    Keywords: announcement, bank, event study, financial crisis, rescue plan
    JEL: G01 G21 N20
    Date: 2014–11
  7. By: Sebastian Edwards; Alvaro Garcia Marin
    Abstract: We investigate whether the inclusion of social rights in political constitutions affects social performance. More specifically, we analyze whether including the right to education in the constitution has been related to better "educational outcomes." We rely on data for 61 countries that participated in the 2012 PISA tests. Our results are strong and robust to the estimation technique: we find that there is no evidence that including the right to education in the constitution has been associated with higher test scores. The quality of education depends on socioeconomic, structural, and policy variables, such as expenditure per student, the teacher-pupil ratio, and families' background. When these covariates are excluded, the relation between the strength of constitutional educational rights and the quality of education is negative and statistically significant. These results are important for emerging countries that are discussing the adoption of new constitutions, such as Thailand and Chile.
    JEL: I24 I28 K4 K49 O1 O38
    Date: 2014–09
  8. By: Marcela Eslava; Alessandro Maffioli; Marcela Meléndez
    Abstract: Whether public lending to firms effectively eases credit constraints has been widely studied for very small businesses. The evidence documented for larger firms refers to lending that is significantly subsidized and targeted to these businesses, so the estimated positive effects may reflect poor allocation of public credit. This paper investigates the impact on its beneficiaries of a wide, untargeted and unsubsidized, lending program in Colombia. We use data on all non-micro manufacturing firms and all formal credit operations. After correcting for potential selection biases using econometric techniques, we find that Bancóldex loans increase firms’ employment, purchases of inputs, investment, and output for small (but non-micro) firms, while large firms experience increases in variable inputs, but not on investment. While both short-term and long-term Bancóldex loans are found to have positive impacts on output, input demand and employment, only long-term loans increase investment. Moreover, short-term loans have a larger impact on input demand than long-term loans. Our findings also indicate that Bancóldex’ beneficiaries end up with improved overall credit conditions after receiving Bancóldex credit: the amount of credit received goes up, the duration of the loans increases, and beneficiaries are able to establish credit relationships with more financial intermediaries. Though the interest rates go down, in this dimension the effect is small.
    Keywords: Credit constraints, public development banks, firm growth
    JEL: G28 H43 L25 O12 O54
    Date: 2014–10–15
  9. By: Andalon, Mabel; Azevedo, Joao Pedro; Rodriguez-Castelan, Carlos; Sanfelice, Viviane; Valderrama, Daniel
    Abstract: Poor health at birth has negative long-run effects on individual well-being and is also detrimental for intergenerational mobility. This paper examines whether health outcomes at birth are affected by in utero increased exposure to rainfall and temperature shocks in Colombia, one of the countries in the world with the highest incidence of extreme weather events per year. The paper uses a fixed effects design to gauge the causal effect using variation in fetal exposure to these shocks by municipality and date of birth. The analysis finds negative effects of temperature shocks on birth health outcomes and no effect of rainfall shocks. The results indicate that heat waves lead to a 0.5 percentage point reduction in the probability of being born at full term and a decline of 0.4 percentage point in the probability of newborns classified as healthy. The timing of exposure to the shock matters and it matters differently for different outcomes. These findings are critical to prioritize responses to counteract the negative effects of weather, particularly hot shocks, which are projected to become more frequent and intense with changing climate.
    Keywords: Health Monitoring&Evaluation,Disease Control&Prevention,Population Policies,Gender and Health,Climate Change Impacts
    Date: 2014–11–01
  10. By: Clemente, Felippe; da Silva Júnior, Aziz Galvão
    Abstract: A contract is considered incomplete when the optimal solution for a contractual problem requires some information from the parts which is not observable by one or both parts. This problem is found in the biodiesel production chain among small scale farmers and biodiesel companies in Brazil, which is regulated by a certification called Social Fuel Seal under the framework of the PNPB (Brazilian Program for Production and Use of Biodiesel). In order to minimize this hindrance, an incentive structure was elaborated utilizing the nonlinear programming. The Principal-Agent approach was used to verify if these new incentives allow for the small scale soybean farmer to put great effort level in the agricultural production. When the incentive structure is evaluated through the model proposed, the result indicates that both the farmer and the biodiesel company will have their profits maximized if the producer puts on great effort. Thus, it is clear the importance to include this mechanism of stimulation to productivity increase into the PNPB framework in order to contribute to the competitiveness of the Biodiesel chain in Brazil.
    Keywords: Contracts Farms, Biofuel, Principal-Agent Model, Agribusiness, Food Consumption/Nutrition/Food Safety, Industrial Organization, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods,
    Date: 2013–09
  11. By: Jenkins, Stephen P. (London School of Economics)
    Abstract: This article assesses two secondary data compilations about income inequality – the World Income Inequality Database (WIIDv2c), and the Standardized World Income Inequality Database (SWIIDv4.0) which is based on WIID but with all observations multiply-imputed. WIID and SWIID are convenient and accessible sources for researchers seeking cross-national data with global coverage for relatively long time periods. Against these benefits must be set costs arising from lack of data comparability and quality and also, in the case of SWIID, questions about its imputation model. WIID and SWIID users need to recognize this benefit-cost trade-off and ensure their substantive conclusions are robust to potential data problems. I provide detailed description of the nature and contents of both sources plus illustrative regression analysis. From a data issues perspective, I recommend WIID over SWIID, though my support for use of WIID is conditional.
    Keywords: WIID, imputation, global inequality, inequality, Gini, SWIID
    JEL: C81 C82 D31
    Date: 2014–09

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