Labor markets in Latin America: a look at the supply-side

This work asks whether there is a supply-side story to be told about labor market outcomes in Latin America. We present stylized facts about the connection between the demographic transition and changes in education (the size and quality of the labor force), with labor supply, inequality, and unemployment. The main conclusion is that the neglected topics of demographics and education improve our understanding of the overall decline in employment, the changing pattern of unemployment, and the rise in wage inequality. By adding them to the well-established demand and institutional factors behind these outcomes, we can obtain a clearer picture about labor markets in Latin America.     

International Stock Market Linkages and Spillovers: Evidence from Three Latin American Countries

ABSTRACT

Using a multivariate exponential generalized autoregressive conditionally heteroscedastic (M-EGARCH) model, this study examines price and volatility spillovers and response asymmetries between the equity markets of the United States and Brazil, Chile and Mexico. Our results vary depending on the openness of the country in terms of international trade. Evidence indicates that there are price and volatility spillovers from the United States to Mexico and Chile and but not to Brazil. In addition, our results indicate response asymmetries for Mexico and Chile, suggesting that the Mexican and Chilean markets are more sensitive to negative innovations originating from other markets than to positive innovations.

RESUMEN. Este estudio examina contagios de precio y volatilidad, y respuestas asimétricas entre los mercados de capital de Estados Unidos y Brasil, Chile y México, fundándose en un modelo exponencial generalizado multivariado, con un condicionante autoregresivo heteroscedástico (M-EGARCH). Los resultados obtenidos varían, dependiente del nivel de apertura de un país en lo que concierne al comercio internacional. Las pruebas indican que existen contagios de precio y volatilidades desde los Estados Unidos hacia México y Chile, pero no hacia Brasil. Además, los resultados también indican asimetrías de respuesta para México y Chile, sugiriendo que estos dos mercados son más sensibles a las innovaciones negativas que se originan en otros mercados, que a las innovaciones positivas.

RESUMO. Usando um modelo condicionalmente heterocedástico, autoregressivo, generalizado, exponencial e multivariado (M-EGARCH), este estudo examina contágios de preços e volatilidade, e assimetrias de resposta entre mercados de ações dos EUA e Brasil, Chile e México. Nossos resultados variam, dependendo da abertura do país em termos de comércio internacional. Os dados indicam que existem contágiosde preço e volatilidade dos EUA para o México e Chile, mas não para o Brasil. Além disso, nossos resultados indicam assimetrias de resposta para o México e Chile, sugerindo que estes mercados são mais sensíveis a inovações negativas originárias de outros mercados do que a inovações positivas.     

Ownership and capital structure in Latin America

This study evaluates the capital-structure determinants of Latin American firms using a comprehensive sample covering seven countries. Firms in the region have debt levels similar to those of U.S. firms, which is puzzling, given that Latin American firms experience relatively lower tax benefits and higher bankruptcy costs. This study argues that ownership-concentrated firms avoid issuing equity because they do not want to share control rights. Latin American firms have high ownership concentration, which creates an ideal setting to study how ownership concentration explains firms' capital structure. Consistent with the control argument, this study finds a positive relation between leverage and ownership concentration, when losing control becomes an issue. Also, the study shows a positive relation between leverage and growth. In addition, the study reports that other determinants that do not proxy for control rights are consistent with previous findings. Firms that are larger, have more tangible assets, and are less profitable are also more leveraged.     

Latin America: Environmental and firm-level challenges

During the last decades Latin America, as the rest of the world, has gone through a process of increased commercial openness and due to the commodities price boom of the last years the region has grown significantly. However competitiveness hasn't improved much, mostly due to lack of concern from governments. Companies, though, cope with the increase in competition resulting from the greater openness by refining their management practices in the different management areas: marketing, finance, information technology and strategy. Academics study these effects in the papers that comprise the special issue of the Journal of Business Research with the best papers from the conferences of the Business Association for Latin American Studies (BALAS).     

Determinants of cross-border M&As in Latin America

This article analyzes the determinants of cross-border M&As in the Latin American region during the period 1998-2004. Using a unique dataset of 868 Mergers and Acquisitions (M&A) events, the study focuses attention on the effect of macroeconomic and investor protection conditions in the countries where the companies reside over the likelihood of these companies participating in a cross-border M&A transaction. The study considers the effect of company-specific variables in the likelihood of going cross-border. Univariate analysis and logistic regressions strongly support the idea that better economic and business-friendly conditions in the countries where the target operates, increase the likelihood of cross-border merger. Results show that not only is the business environment in the target country important but also in the bidder country. Lower levels of property rights protection in the acquirer country negatively affect the likelihood of a cross-border deal. Finally, the likelihood of a cross-border merger increases when the target faces higher cost of funding than the acquirer's.     

Differentiation strategies in emerging markets: The case of Latin American agribusinesses

This study furthers the research agenda on Porter's generic strategies by exploring their implementation by firms that suffer from under representation in the literature. It focuses on agribusinesses based in emerging markets that specialize in high value added products. Relying on information collected through interviews, and a survey with 66 agribusinesses based in eight countries of Latin America, it examines the factors that distinguish firms implementing a differentiation strategy (DS). The findings provide interesting insights for scholars and practitioners alike, illustrating the strategic initiatives that DS firms use to ensure they command higher than average prices.     

Strategic management in Latin America: Issues and assessment

This paper summarizes the best papers of the Strategic Management in Latin America (SMLA) conference which took place in January 2009 in Sao Paulo. Within a context of economic crisis that started in 2008 the authors find that the matters of business strategy within Latin America, addressed in the paper of this special issue, are relevant today just as when the authors submitted their papers. The strategic choices made by individual firms independent of the ever changing economic climate in which they find themselves is the key to the firm. The papers in this special issue cover a variety of topics encompassed within the area of strategic management: competitiveness, strategy formulation and execution, functional business disciplines and institutional strength in Latin America.     

Needed B2B marketing capabilities: Insights from the USA and emerging Latin America

Firms from all parts of the world are expanding operations globally in a turbulent economic context, requiring the understanding of nontraditional markets. Much attention has been focused on China and India, but researchers have neglected Latin America, a region economically as important as Germany, India, Japan, and South Korea. Latin America, as is true of many developed and emerging markets, has a strong presence of industrial ? or business to business (B2B) ? transactions. The configuration and convergence-divergence of marketing capabilities are relevant for the understanding of the globalization phenomenon. This study aims to examine B2B marketing capabilities of firms in Chile, Mexico and Peru (as Latin American countries), seeking conceptual issues in order to comprehend their business perspectives and contribute to the almost nonexistent body of research in this region. How do the results from Latin America compare with the USA? While the study shows directional convergence between Chile and Peru, there also is interesting divergence between all Latin American countries and the USA. The findings offer a portfolio of marketing topics that we believe are worthy of practitioner and academic consideration. We propose a model of convergence-divergence of B2B marketing capabilities across nations and state propositions for hypothesis testing.     

Innovation and business research in Latin America: An overview

Innovation in Latin America is a challenge for achieving development. Several Latin American countries and businesses are attempting to increase innov ation and entrepreneurship but they face substantial challenges and difficulties. Institutional, governmental and business policies and practices need to be enhanced in order to increase such innovation. Increasing business research in Latin America and university-business partnerships is probably key in such endeavor. This special issue provides some evidence regarding these challenges at the company level, industry level, and country level. This issue also includes three cases showing Latin American company experiences with financial, marketing and new product innovations and market changes.     

对外开放与发展中国家的收入不平等:基于亚洲和拉美国家的比较研究

本文基于要素禀赋理论,在将劳动力划分为低、中、高技能三类的基础上,选取亚洲和拉丁美洲部分发展中国家1960-2005年的数据,建立非平衡面板模型,分析两地区的开放对国内收入分配的影响。实证结果表明,亚洲和拉丁美洲发展中国家的对外开放确实对国内收入不平等起到推动作用。目前的开放有利于中等技能劳动力相对丰裕的发展中国家,而不利于低技能劳动力相对丰裕的国家。总体的贸易依存度对拉美不平等的推动作用更大,但外资对亚洲不平等的推动作用更大;制造业出口倾向于扩大拉美国家的收入差距而缩小亚洲国家的收入差距。     

出口、对外投资与中国国家形象:来自拉丁美洲的证据

改革开放以来,中国对以开放促发展的道路进行了全面的探索,"走出去"战略的提出,加快了中国资本走出国门的步伐。国家形象作为"软实力"建设的重要一环,是否会受到越来越活跃的对外经济活动的影响,如何在不断扩大对外经济活动的同时塑造一个良好的国家形象?本文使用Latinobarómetro所提供的涵盖18个拉美国家的微观调查数据,尝试对这一问题做出回答。通过实证模型的检验,结果发现:中国出口的增加会降低东道国对于中国国家形象的评价,但影响程度较小,而对外投资则对中国国家形象有正向影响。通过加入表征个体特征变量与核心变量的交互项,文章发现受教育水平越高、经济条件越好以及具备学生身份的群体随着中国在东道国经济活动的增强,对于中国国家形象的评价会越高。分行业来看,初级产品部门的出口活动所引致的对于中国国家形象的负面评价最为显著;从具体的职业划分来看,无论是中国的出口总额、出口种类还是对外投资,对东道国个体经营者造成的影响相对于工薪阶层要更加显著。     

Economic Democracy, Social Dialogue, and Ethical Analysis: Theory and Practice

The purpose of this article is to present in a summarized form a new approach to the ethical analysis of economic policies and to illustrate its importance with a reference to recent experiences of social dialogue in Costa Rica.A general view of the Latin American scenario is presented, with the belief that some of the main problems there observed call for a type of analysis like the one here proposed. In the second place, a brief characterization of this new ethical analysis is included.Democracy suffers from the existence of asymmetries in social and economic relationships, insofar as the success of political democracy cannot be neither understood nor built up independently from economic democracy. The strengthening of democratic processes in Latin America requires a better understanding and consolidation of the relationship between political democracy and economic democracy. On the other hand, present orientation of globalization makes of the international environment an obstacle to realize democracy at a national level. Hence, two focus of interest arise for the ethical analysis of economics at the macroeconomic level: the study of the ethical conditions of participation for each country in the globalization process, and the realization of an economic democracy within each particular country.After identifying both lines of reflection, this article summarizes the theoretical basis of a proposal for the ethical analysis of economic policy making. This approach attempts to answer the challenges of economic democratization. Centered on the ethical dimension of these processes, and from the point of view of a dialogical ethics, stress is given to those aspects of the process which will guarantee the ethical character of the consequences. This is a methodological approach which tries to discover the ethical values feasible within the economic policies and, at the same time, to go in greater depth in the construction of democratic practices. Rooted in the Latin American regional reality, this academic reflection is just in its beginning and must be considered as complementary to the business ethics analysis already developed in Latin America and Spain.A reference to recent experiences of social dialogue in Costa Rica gives the theoretical presentation a support for the acceptance of its realization in practice.     

Mapping the trading behavior of the middle class in emerging markets: Evidence from the Istanbul Stock Exchange

Predicted to grow above 4.9 billion by 2030, with an overall spending capacity of $56 trillion, the rise of the middle class in emerging markets has attracted global practitioner and academic attention. How this new wealth will be invested is a central question; yet our understanding still remains fragmented. Drawing on the literatures of international business, behavioral economics and finance and using high-frequency stock market data, we examine and map the trading behavior of the middle class in Turkey, one of the fastest rising economic powers of the East. We find that middle class traders exhibit discernible differences to professionals, with respect to risk attitudes and stock preferences (e.g. prefer lower-risk, smaller-size and ‘value’ stocks). In addition, while they typically hold small portfolios and tend to realize lower gains than professionals, their role has become considerably influential to the direction of the entire market.     

Modelling the Impact of Environmental Regulations on Bilateral Trade Flows: OECD, 1990–1996

Since the early seventies an increasing attention has been paid to the impact environmental polict nmight have on foreign trade. One of the most important issues is whether countries with relatively strict environmental regulations tend to experience a deterioration of international competitiveness and thus a fall in exports and a rise in imports, of the pollution‐intensive commodities or, on the other hand, benefit from the improvement in environmentally more sensitive industries. So far, most empirical studies have concluded that the proportion of environmental costs to the total production costs is still so marginal that environmental policies have hardly any effect on comparative advantage patterns and thus on foreign trade. One of the few exceptions is Van Beers and Van den Bergh (1997), who found that stricter regulations have some negative impact on bilateral trade flows between OECD countries. The aim of this paper is to show that tyhis outcome is partly due to model mis‐specification. The analysis id based on a triple indexed model and on its variants. It is found that, as soon as both the importing and exporting country specific effects are taken into consideration, the relationship between stricter regulations and foreign trade becomes statistically insignificant. This suggests that environmental costs do not have a real impact, neither negative nor positive, on foreign trade.     

Dependence between the global gold market and emerging stock markets (E7+1): Evidence from Granger causality using quantile and quantile‐on‐quantile regression methods

This study examined the dependence between gold and stocks during 2002–18 in seven emerging countries. The study combined the bivariate cross‐quantilogram introduced recently with quantile‐on‐quantile regression (QQR) approaches to conduct comprehensive and complementary analyses. The QQR results for the full sample revealed a weak positive dependence in all the quantiles of gold and stock returns across all the countries selected during mild market conditions. The results for pre and post‐crisis periods largely were consistent with those obtained for the full sample, except for Turkey (pre‐crisis), and China and Indonesia (post‐crisis). The results of the causality test‐in‐mean (return) and that of the causality test‐in‐variance revealed no causal relation between stock and gold in the pre‐crisis period, while causality ran only from gold to some stocks in the post‐crisis period. Further, while there was volatility causality running only from gold to stocks during the pre‐crisis period, the volatility causality between the two markets was very high during the post‐crisis period. Therefore, we suggest that gold may have been a hedge for stocks during the pre‐crisis compared to the post‐crisis period. Further, international risk factors should be considered in optimal investment decisions between domestic and global markets' assets (stocks and gold).     

The globalisation–welfare state nexus: Evidence from Asia

How globalisation influences social expenditure has been examined for industrialised countries. Globalisation has often been shown to be positively associated with social expenditure in established industrialised countries, a finding that corroborates the compensation hypothesis. Scholars have focused on industrialised countries, because social expenditure is difficult to measure in developing countries. I use new data on social expenditure for Asian non‐OECD countries. Globalisation is measured by the new KOF Globalisation Index. My results do not suggest that globalisation influenced social expenditures in Asia. Neither do the results suggest that the nexus between globalisation and social expenditures varied across high‐income countries, such as Hong Kong and Singapore, and lower‐income Asian countries or across Asian regions. It is conceivable that Asian citizens did not demand increasing social support when globalisation proceeded rapidly because they enjoyed family and other private assistance. Asian countries also have weaker tax and labour market institutions than OECD countries and have therefore more difficulties in increasing social expenditure.     

Banking systems,innovations, intellectual property protections,and financial markets: Evidence from China

One unique feature of the emerging economies in Asia is the rich variation in the development of financial systems and technological sectors across different geographical areas. This unbalanced evolution provides us a potentially more powerful setting to investigate the dynamics among banking systems, innovations, intellectual property (IP) protections, and stock market reactions that are especially useful in understanding the policy–finance–innovation nexus in emerging economies. Using newly available data from China, this study confirms the nurturing role of financial systems on innovations, the value-enhancing function of firms' innovative activities, and the lead–lag predictive role of innovations on stock returns, in the context of emerging economies. More importantly, the study documents that stronger provincial IP protections reduce patent piracy and hence enhance local firms' market values.     

Entrepreneurship,Innovation and Economic Growth: Evidence from GEM data

Studies on the impact of technological innovation on growth have been largely mute on the role ofnew firm formation. Using cross-sectional data on the 37 countries participating in GEM 2002, this paper uses an augmented Cobb–Douglas production to explore firm formation and technological innovation as separate determinants of growth. One area of interest is the contrast between different types of entrepreneurial activities as measured using GEM Total Entrepreneurial Activity (TEA) rates – high growth potential TEA, necessity TEA, opportunity TEA and overall TEA. Of the four types of entrepreneurship, only high growth potential entrepreneurship is found to have a significant impact on economic growth. This finding is consistent with extant findings in the literature that it is fast growing new firms, not new firms in general, that accounted for most of the new job creation by small and medium enterprises in advanced countries.