nep-lam New Economics Papers
on Central and South America
Issue of 2019‒10‒28
four papers chosen by

  1. The Chilean economy since the return to democracy in 1990. On how to get an emerging economy growing, and then sink slowly into the quicksand of a “middle-income trap” By Palma, J. G.
  2. Economic Complexity and Inequality : Does Productive Structure Affect Regional Wage Differentials in Brazil? By Margarida Bandeira Morais; J. Swart; J.A. Jordaan
  3. Can Behavioral "Nudges" Improve Compliance? The Case of Colombia Social Protection Contributions By James Alm; Laura Rosales Cifuentes; Carlos Mauricio Ortiz Niño; Diana Rocha
  4. Energy poverty measures and the identification of the energy poor: A comparison between the utilitarian and multidimensional approaches in Chile By Carlos Villalobos Barría; Carlos Chávez; Adolfo Uribe

  1. By: Palma, J. G.
    Abstract: The main hypothesis of this paper is that the Chilean economy's poor performance over the last two decades (e.g., average productivity growth collapsed by three quarters vis-à-vis the previous cycle) results from its development strategy having run its course -being now in desperate need of a full “upgrade” (one capable of generating new engines of productivity growth; e.g., the industrialisation of commodities, a “green new deal”, or the spread of the new technological paradigm to the four corners of the economy). The same can be said of the neo-liberal ideology at its foundations, as most of its “absolute certainties” are being shaken to the core. However, neither the (not so) invisible hand of distorted markets, nor centre-left or centre-right governments have had much of a clue as to how to bring this change about. There is also (unlike, say, in some Asian economies) a generalised lack of nerve to do anything about it. Consequently, the Chilean economy is now jammed in a rather transparent -and self-made- “middle-income trap”. In fact, change has come in the opposite direction: in order to reinforce the growingly fragile status quo, a new policy-straightjacket has been added in the form of the Transpacific Treaty, or TPP-11, which gives large corporations (foreign and domestic) a de facto veto against any change in policy. In turn, the advanced countries’ “reverse catching-up” isn’t helping either, as this also helps reinforce the convictions of those in Chile defending the status quo. We are all now indeed converging in the West, north and south, but towards Latin American features such as mobile élites creaming off the rewards of economic growth, and ‘magic realist’ politics that lack self-respect if not originality. In fact, it is now even tempting to say to those in the high-income OECD “Welcome to the Third World”.
    Keywords: Chile, Latin America, emerging Asia, Catching-up, “Reverse catching-up”, Export “upgrading”, Productivity, Immigration, “premature” de-industrialisation, Keynes, Hirschman, Foucault, Neo-liberalism, Inequality, Rent-seeking
    JEL: B52 E20 F13 F53 H54 J20 L52 N16 N66 O16 O40 P50
    Date: 2019–10–16
  2. By: Margarida Bandeira Morais; J. Swart; J.A. Jordaan
    Abstract: Brazil is an upper middle income economy, with a GDP per capita of close to 12,000 (constant) dollars in 2014. Nonetheless, Brazil has a significant amount of people living under poverty. 7.6% of the population was poor in 2014 (Poverty headcount ratio at $3.10 a day, 2011 PPP), making Brazil one of the most unequal countries in the world. Concomitantly, Brazil's different regions and states are highly heterogeneous with respect to income levels, inequality, and prevalence of poverty. Moreover, in the last past decades, the dispersion of inequality between states has increased. This paper shows that Brazilian states are also heterogenous in terms of economic complexity; and analyzes how economic complexity affects income inequality. To test the relationship between economic complexity and income inequality we employ panel data analysis for the 27 Brazilian states over the period 2002-2014. Our main proposition is that economic complexity affects regional wage differentials in a nonlinear way. Our findings confirm this proposition and point to an inverted U-shaped relationship, whereby higher economic complexity is initially associated with higher, and subsequently lower, inequality levels.
    Keywords: Income inequality, economic complexity, productive structure, Brazil, Kuznets curve, wage differentials, Gini, Theil, economic development, Brazilian states, panel data, ECI
    Date: 2018
  3. By: James Alm (Tulane University); Laura Rosales Cifuentes (Gandour Consultores); Carlos Mauricio Ortiz Niño (Gandour Consultores); Diana Rocha (Gandour Consultores)
    Abstract: The Government of Colombia imposes a variety of taxes that must be paid by individual wage earners, called in their entirety "social protection contributions". Since 2007 individual payments have been collected using an on-line mechanism. In order to improve compliance, the Government used a controlled field experiment in which various "pop-up messages" were sent to individuals when making their on-line payments, as behavioral "nudges". We examine the impact of these nudges on individual reporting behavior. We find mixed evidence that these messages increased compliance rates relative to a control group that received a so-called "neutral" message. However, we also demonstrate that the use as the control group of individuals receiving a so-called "neutral" message creates considerable bias; that is, the receipt of any message of any type clearly influences behavior. Instead, we show that the appropriate control group should be individuals who receive no message at all.
    Keywords: tax compliance; behavioral economics; nudges; controlled field experiments.
    JEL: H2 H26 C9
    Date: 2019–10
  4. By: Carlos Villalobos Barría (Universidad de Talca, Chile); Carlos Chávez (Universidad de Talca / Chile); Adolfo Uribe (Universidad de Talca, Chile)
    Abstract: This work explores the consequences that different energy poverty definitions might have in the energy policy debate. We estimate the ten percent rule index (TPRI) while proposing and measuring a multidimensional energy poverty index (PMEPI). Both indices uses the 2017 National Survey of Public Perception on Energy applied to a sample of 3,500 households in Chile. Although both measures find that the energy poor represents about 15% of the population, energy poverty levels vary differently across the population depending on the employed measure. Moreover, the indices produce different energy poverty rankings across the territory, and most energy poor households are either TPRI poor or PMEPI poor. We found that this discrepancy between both energy poverty measures is mostly explained by territorylinked factors such as public lighting, service quality, service reliability, and thermal comfort. Consequently, an energy poverty analysis based solely on income or energy expenditure information (TPRI) is likely to neglect supply side constraints that are captured by the PMEPI. When identifying and targeting the energy deprived, the conclusion is that both energy poverty measures should not be used as substitutes but as complements.
    Keywords: Energy Poverty; Poverty; Multidimensional Energy Poverty Index, Ten Percent Rules Energy Poverty Index, Affordability, Reliability of Energy Services, Quality of Energy Services
    Date: 2019–10–08

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