nep-lam New Economics Papers
on Central and South America
Issue of 2017‒02‒19
three papers chosen by
Maximo Rossi
Universidad de la República

  1. The Recent Growth Boom in Developing Economies: A Structural Change Perspective By Xinshen Diao; Margaret McMillan; Dani Rodrik
  2. Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries By Nora Lustig
  3. The paradox of land reform, inequality and development in Colombia By Jean-Paul Faguet; Fabio Sánchez; Marta-Juanita Villaveces

  1. By: Xinshen Diao; Margaret McMillan; Dani Rodrik
    Abstract: Growth has accelerated in a wide range of developing countries over the last couple of decades, resulting in an extraordinary period of convergence with the advanced economies. We analyze this experience from the lens of structural change – the reallocation of labor from low- to high-productivity sectors. Patterns of structural change differ greatly in the recent growth experience. In contrast to the East Asian experience, none of the recent growth accelerations in Latin America, Africa, or South Asia was driven by rapid industrialization. Beyond that, we document that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. The African experience is particularly intriguing, as growth-enhancing structural change appears to have come typically at the expense of declining labor productivity growth in the more modern sectors of the economy. We explain this anomaly by arguing that the forces that promoted structural change in Africa originated on the demand side, through either external transfers or increase in agricultural incomes. In contrast to Asia, structural change was the result of increased demand for goods and services produced in the modern sectors of the economy rather than productivity improvements in these sectors.
    JEL: O1 O11 O4
    Date: 2017–02
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:23132&r=lam
  2. By: Nora Lustig (Stone Center for Latin American Studies, Department of Economics, Tulane University, Commitment to Equity Institute (CEQI).)
    Abstract: Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for twenty-eight low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. In Ethiopia, Tanzania, Ghana, Nicaragua, and Guatemala the extreme poverty headcount ratio is higher after taxes and transfers (excluding in-kind transfers) than before. In addition, to varying degrees, in all countries a portion of the poor are net payers into the fiscal system and are thus impoverished by the fiscal system. Consumption taxes are the main culprits of fiscally-induced impoverishment. Net direct taxes are always equalizing and indirect taxes net of subsidies are equalizing in nineteen countries of the twenty-eight. While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing but not always propoor. More unequal countries devote more resources to redistributive spending and appear to redistribute more. The latter, however, is not a robust result across specifications.
    Keywords: Fiscal incidence, social spending, inequality, poverty, developing countries
    JEL: H22 H5 D31 I3
    Date: 2017–01
    URL: http://d.repec.org/n?u=RePEc:tul:ceqwps:1354&r=lam
  3. By: Jean-Paul Faguet; Fabio Sánchez; Marta-Juanita Villaveces
    Abstract: Over two centuries, Colombia transferred vast quantities of land, equivalent to the entire UK landmass, mainly to landless peasants. And yet Colombia retains one of the highest concentrations of land ownership in the world. Why? We show that land reform’s effects are highly bimodal. Most of Colombia’s 1100+ municipalities lack a landed elite. Here, rural properties grew larger, land inequality and dispersion fell, and development indicators improved. But in municipalities where such an elite does exist and landholding is highly concentrated, such positive effects are counteracted, resulting in smaller rural properties, greater dispersion, and lower levels of development. We show that all of these effects – positive and negative – flow through local policy, which elites distort to benefit themselves. Our evidence implies that land reform’s second-order effects, on the distribution of local power, are more important than its first-order effects on the distribution of land.
    Keywords: Land reform; inequality; development; latifundia; poverty; Colombia
    JEL: Q15
    Date: 2017–02
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:69207&r=lam

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