China's Economic Influence in Latin America

After decades of low‐level commercial interaction, China and Latin America significantly ramped up their economic relationship in the 2000s. China has jumped to first place as an export destination for many countries, and it is a major source of imports for all countries in the Latin America/Caribbean region. While not a major source of foreign direct investment overall, China has built a strong investment presence in certain countries, particularly in the natural resource and infrastructure sectors. China's influence in Latin America has presented a great opportunity for many countries, but it has also brought new risks. Three main challenges face the region: how to mitigate the impacts of increased commodity concentration as a result of China's strong demand for natural resources; how to avoid other natural resource curse effects; and how to manage the tapering of this growth. Latin American countries' relationships with China vary widely, so there is no single, coordinated regional response.     

FDI,Foreign Aid,Remittance and Economic Growth in Developing Countries

Using a dynamic spatial framework, this paper investigates how foreign direct investment (FDI), foreign aid and remittances impact the economic growth of 53 African and 34 Latin American and Caribbean countries. Previous growth studies examine how one factor or two of these factors impacts economic growth, which results in biased estimation because of the omitted variable(s). Separate estimation shows foreign aid and FDI affects economic growth in Africa, but when we control for all three factors, only FDI affects African economic growth. For Latin America and the Caribbean, foreign aid and remittances affect growth when estimated separately, while remittances affect growth when they are estimated simultaneously. Finally, both regions' results confirm spatial interdependence is important in explaining economic growth, as growth in one country depends on the growth of its neighboring countries.     

The Penalties of Inefficient Infrastructure

In most developing countries, irrigation, road, and power networks are not in good condition. In Latin America, for example, the effectiveness of such public infrastructure is only about 74% of that of industrialized countries. Low effectiveness imposes a cost on these countries in terms of forgone output. This paper develops a general–equilibrium model to study the long–run consequences of ineffective infrastructure. The model is solved numerically using parameters from seven Latin American countries. Results show that the long run penalty of ineffective infrastructure is about 40% of steady–state real GDP per capita. Raising effectiveness is shown to have sizable positive effects on income per capita, private investment, consumption, and welfare. Nevertheless, policymakers instead usually emphasize building new infrastructure. If effectiveness is low in the existing infrastructure network, new infrastructure investments can negatively affect per–capita income, private investment, consumption, and welfare.     

Foreign Banks and Credit Volatility: The Case of Latin American Countries

The number of foreign banks in Latin America increased substantially over the period 1995–2001, prompting a debate on the potential consequences for host countries. Discussions focused on efficiency, the impact on competition and product market diversification in the banking industry, and the quality of the regulatory environment, among other issues. Against this background, this paper uses ARCH techniques to test the impact of foreign banks on both the level and the volatility of real private bank credit in a panel of eight Latin American countries, using quarterly data over the period 1995–2001. The empirical findings show that, together with financial development, the presence of foreign banks has contributed to reducing real credit volatility, improving the buffer shock function of the banking sector.     

Veblen and Kropotkin on Human Evolution

This paper studies the spillover effects of economic fluctuations in the United States on economic activity in Latin America and the Caribbean. Fluctuations in U.S. GDP growth have spillover effects that stimulate real growth and accelerate price inflation across many countries. Underlying these spillover effects are significant movements in private consumption, and to a larger extent, private investment. Openness to the United States has significant effects that accelerate growth of exports and/or imports across many countries. The net effects on the trade and current account balances vary across countries. Overall, the evidence supports concerns about adverse spillover effects of a slowdown in the U.S. economy on neighboring countries, necessitating careful mobilization of countercyclical domestic tools to hedge against potential risk and mitigate the severity of economic downturns.     

DOES FOREIGN DIRECT INVESTMENT PROMOTE ECONOMIC GROWTH? EVIDENCE FROM EAST ASIA AND LATIN AMERICA

Although there is considerable evidence on the link between foreign direct investment (FDI) and economic growth in developing countries, causal patterns of the two variables has not been investigated yet with a reliable procedure. This article provides an empirical assessment of the issue by using data for 11 economies in East Asia and Latin America. Although FDI is expected to boost host economic growth, it is shown that the extent to which FDI is growth-enhancing appears to depend on country-specific characteristics. Particularly, FDI tends to be more likely to promote economic growth when host countries adopt liberalized trade regime, improve education and thereby human capital conditions, encourage export-oriented FDI, and maintain macroeconomic stability.     

Women's education and economic well-being

Evidence across regions in the world reveals patterns in school enrollment ratios and literacy that are divided along gender lines. In the developing world, apart from most countries in Latin America and the Caribbean, enrollment ratios of girls lag behind those for boys at all levels of education. Worldwide literacy rates for adult men far exceed those for women. While educational progress has been enjoyed by both sexes, these advances have failed to eradicate the gender gap. Education enhances labor market productivity and income growth for all, yet educating women has beneficial effects on social well-being not always measured by the market. Rising levels of education improve women's productivity in the home which in turn can increase family health, child survival, and the investment in children's human capital. The social benefits from women's education range from fostering economic growth to extending the average life expectancy in the population, to improving the functioning of political processes. This paper reviews recent empirical research that analyzes the benefits of women's education, describes the importance of women's education for country-level measures of economic development, and examines the implications of a gender gap in education for aggregate social well-being.     

刍议国际投资优惠待遇竞争与评估

国际投资是全球资源配置的重要形式,为吸引外资,各国尤其是发展中国家采取种种激励措施,这在一定程度上引发了激励措施国际竞争.分析评估了国际投资激励措施,研究讨论了激励措施的双边、区域及多边的国际规制,提出逐步完善国际协调机制,最大限度地增进世界各国的经济福利.     

A note on schooling and wage inequality in the public and private sector

The few studies that have examined the wage impact of education across the earning distribution have focused on high-income countries and show education to be more profitable at the top of the distribution. The implication is that education may increase inequality. Extending the analysis to 16 East Asian and Latin American countries, in Latin America we observe a pattern similar to that of Europe/North America (increasing wage effects), while in East Asia the wage effects are predominantly decreasing by earnings quantile. However, once the analysis is performed separately for the public and the private sector, it is revealed that the strongly decreasing impact of schooling on earnings in the public sectors of East Asian countries is responsible for the overall observed decreasing pattern, while the impact of schooling on earnings in the private sectors of these countries is non-decreasing.     

Spillovers to low-income countries: importance of systemic emerging markets

This article documents the expanding economic linkages between low-income countries (LICs) and a narrow group of ‘Emerging Market (EM) leaders’ that have become major players in international trade and financial flows. VAR models show that these linkages have increased the share of growth volatility that can be attributed to foreign shocks in LICs. Dynamic panel models further analyse the impact of LIC trade orientation and production structure on the sensitivity to foreign shocks. The empirical results demonstrate that the elasticity of growth to trading partners’ growth is high for LICs in three out of the five regions: Asia, Latin America and the Caribbean, and Europe and Central Asia. However, for commodity-exporting LICs in Sub-Saharan Africa and the Middle East, terms of trade shocks and demand from the EM leaders are the main channels of transmission of foreign shocks     

Material use and material efficiency in Latin America and the Caribbean

Different world regions have followed very different trajectories for natural resources use over the recent decades. Latin America has pursued a development path based largely on exports of primary resources. Adopting this path has characteristic environmental and social impacts. In this paper, we provide the first broad based estimate of material use and material efficiency for the region, beginning in 1970 and extending to the onset of the global financial crisis in 2008. The results show a region with rapidly growing primary materials consumption, which is simultaneously becoming less efficient at converting those resources into national income. Using an IPAT framework, we found that population growth and rising per-capita incomes made comparable contributions to growing material use, while technological change as reflected in material intensity, did not moderate consumption. Increasing materials intensity, observed for the region as a whole, is also observed for most individual countries. This contrasts with some other world regions, and implies that many countries in Latin America and the Caribbean will confront higher environmental pressures than expected when expanding their extractive industries to take advantage of new demand from other world regions, while simultaneously supplying the requirements for their own domestic industrial transformations and urbanization.     

Monetary union in Latin America: an assessment in the context of optimum currency area

The article applies the optimum currency area (OCA) theory to Latin America to assess the potential of a monetary union in Latin America and in its major existing regional trade agreements (RTAs). According to OCA criteria we find that Latin America is far from being an optimum currency area, as its countries’ exposure to asymmetric shocks is high and their capacities to adjust in response to macroeconomic disturbances are limited. Using a panel of 20 Latin American countries from 1990 to 2014, we apply the dynamic OLS estimation techniques to estimate the costs and benefits of a potential monetary union in Latin America and in its various RTAs. to estimate the costs and benefits of a potential monetary union in Latin America and in its various RTAs. We find that the costs are high, because Latin America’s economies are vulnerable to severe macroeconomic disturbances and its RTAs differ significantly in their response to negative demand shocks. Most of the monetary efficiency gains are shown to be the result of a common restrictive monetary policy which would result in higher FDI inflows and, to a more limited extent, increased GDP, both overall and per capita. Although Central American countries are shown to be most suitable for further monetary integration, we conclude that Latin American countries should head first towards greater economic and political integration.     

Remittances, Financial Market Development, and Economic Growth: The Case of Latin America and the Caribbean

Within a theoretical framework, the author analyzes the effects that both workers' remittances and financial intermediation have on economic growth. It is found, among other things, that remittances can have significant positive long-run effects on growth. The author confronts the implications of the theoretical model proposed with panel data for countries in Latin America and the Caribbean. After considering the effect of long-run investment and demographic variables, and controlling for fixed time and country effects, the empirical analysis indicates that financial intermediation tends to increase the responsiveness of growth to remittances. The overall conclusion is that making financial services more generally available should lead to even better use of remittances, thus boosting growth in these countries.     

Determinants of US direct foreign investment in the Caribbean

This study evaluates two groups of variables (economic and structural/locational) associated with US short- and long-run direct foreign investment (DFI) in the Caribbean over the 1983–1994 period. Separate generalized least square models for the Caribbean and Latin America were estimated to determine whether differences existed between the two regions as to the variables associated with the levels of DFI. This helped provide insights as to the strategies that should be maintained or introduced to give the Caribbean a competitive edge in attracting the limited amounts of US DFI likely to be available for investment in the Western hemisphere.     

Spectrum allocation in Latin America: An economic analysis

As elsewhere, wireless markets play a crucial role in Latin American economic growth. Mobile telephone networks increasingly provide the communications infrastructure that has largely been lacking throughout the region. Yet, governments have generally made only modest allocations of bandwidth available to Latin American wireless operators, either absolutely (in terms of spectrum each country could allocate at modest opportunity cost) or relative to countries in North America, Asia and the European Union. Using an empirical model estimated on mobile phone data for international markets, we show that very large social benefits are available to countries that make more spectrum available for mobile phone markets. We conduct simulations using our calibrated model to provide lower bounds for country-by-country gains from larger allocations. We also discuss the impact of alternative regulatory regimes on the feasibility to achieve those social gains.     

Saving less when there is more foreign lending? Foreign debt and savings in developing countries

Although literature has given considerable attention to the effects of foreign debt on growth, we still know little about its effects on the internal potential for capital formation. Literature suggests a number of channels through which the availability of foreign financing could affect domestic savings. We test empirically this relationship using data for Sub‐Saharan Africa and Latin America and the Caribbean over 1975–2004. Controlling for endogeneity, we find that foreign debt adversely influences domestic savings especially in the long run. The results are not susceptible to the choice of countries, although few outliers should be noted.     

The Political Economy of Growth in Latin America and East Asia: Some Empirical Evidence

This article examines the historical records of poor economic performance of Latin America compared to East Asia's relative success in the 1970s and 1980s. Although both regions adopted similar postwar protective inward-oriented development strategies, their experiences and economic outcomes diverged significantly in subsequent years. Some have argued that East Asian countries outperformed Latin American ones because they implemented appropriate policies that were adaptive to changes in the global market scene. This study shows that the respective sociopolitical and institutional environment of the two regions was also an important factor contributing to their economic outcomes. A growth model augmented with policy-driven and sociopolitical variables is developed. Using data for selected countries in both regions, the results confirm the hypothesis of a negative direct (efficiency) effect of sociopolitical instability on growth, with an additional indirect (accumulation) effect through investment, irrespective of a country's location. Policies adopted by governments, particularly to control inflation and foreign indebtedness and to enhance economic freedom and human capital accumulation, appear crucial for stability. Such policies influenced economic performance through both the direct and the indirect channels. (JEL B25 , E13 , F43 , H19 , O57 )     

Foreign informational lobbying can enhance tourism: Evidence from the Caribbean

There exist legal channels for informational lobbying of US policymakers by foreign principals. Foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues. This paper empirically studies whether such lobbying effectively achieves its goal of trade promotion in the context of Caribbean tourism, and suggests the potential for using foreign lobbying as a vehicle for development. Panel data are used to explore and quantify the association between foreign lobbying by Caribbean principals and US tourist arrivals to Caribbean destinations. A variety of sensitivity analyses support the finding of a strong association. The policy implications are obvious and potentially important for developing countries.     

Foreign informational lobbying can enhance tourism: Evidence from the Caribbean

There exist legal channels for informational lobbying of US policymakers by foreign principals. Foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues. This paper empirically studies whether such lobbying effectively achieves its goal of trade promotion in the context of Caribbean tourism, and suggests the potential for using foreign lobbying as a vehicle for development. Panel data are used to explore and quantify the association between foreign lobbying by Caribbean principals and US tourist arrivals to Caribbean destinations. A variety of sensitivity analyses support the finding of a strong association. The policy implications are obvious and potentially important for developing countries.     

Is education important in assessing the impact of institutions on economic growth in emerging economies?

ABSTRACT

In this article, we empirically revise the hypothesis that institutions cause economic growth for emerging countries starting from a theoretical model. Our sample consists of 21 countries covering different zones: European Emerging, Asia Pacific Emerging, Latin America, Middle-East and Africa while the status advanced versus secondary emerging countries based on FTSE (Financial Times Stock Exchange) classification is accounted for. The period analysed is 1995–2014. The methodology is based on System GMM estimator of Arellano-Bover and Blundell-Bond for dynamic panel data. Empirical findings suggest that only variables such as voice and accountability and government effectiveness have a significant positive impact on economic growth rates of the analysed countries. In the presence of control variables, i.e. trade and government final consumption, results are robust. Results remain robust for countries that have a high level of government expenditure on tertiary education which proves the role of education in assessing the impact of institutions on economic growth.