The Latin America and the Caribbean region has returned to the sluggish growth path that characterized the years preceding the commodity boom. This disappointing performance is partly driven by the three largest economies, with Argentina mired in yet another economic crisis, Brazil just emerging from a recession, and Mexico facing an economic slowdown.
... See More + There are other internal disparities, with countries in the Caribbean and in the Pacific sub-regions doing better than those in the Atlantic. But in the aggregate the region is growing by now more slowly not only than other emerging markets, but also than the much richer advanced economies. This divergence of fortunes should be a cause for concern. Multiple reasons can be advanced to explain the region’s anemic growth. This report explores the role that a history of inward-looking strategies might have played. The analysis in this report suggests that most of the expansion will be in the Cerrado region, rather than in the Amazon. But in the absence of other measures there could be a non-negligible forest loss. In sum, trade integration could be a pathway to faster economic development in Latin America and the Caribbean, but only provided that certain conditions are met
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This paper documents an inverse U-shape in the evolution of wage inequality in Latin America since 1995, with a sharp reduction starting in 2002.
... See More + The Gini coefficient of wages increased from 42 to 44 between 1995 and 2002 and declined to 39 by 2015. Between 2002 and 2015, the 90/10 log hourly earnings ratio decreased by 26 percent. The decline since 2002 was characterized by rising wages across the board, but especially among those at the bottom of the wage distribution in each country. Triggered by a rapid expansion of educational attainment, the wages of college and high school graduates fell relative to those with primary education. The premium for labor market experience also fell significantly. But the compression of wages was not entirely driven by changes in the wage structure across skill groups. Two-thirds of the decline in the variance of wages took place within skill groups. Changes in the sectoral, occupational, and formal-informal composition of jobs matter for the process of reduction in inequality, but do not fully account for the fall in within-skill variance. Evidence using longitudinal matched employer-employee administrative data suggests that an important driver was falling wage dispersion across firms.
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Policy Research Working Paper WPS8995 SEP 03, 2019
According to the World Trade Organization (WTO), trade in services has become the most dynamic segment of world trade, growing more quickly than trade in goods.
... See More + While travel remains the most exported service both worldwide and in Latin America and the Caribbean (LAC), other services are becoming relevant for both developed and developing economies. Among them, financial services is one of the most important categories in terms of value. Worldwide, the value of financial services exports rose in real terms between 2008 and 2017. Nevertheless, this global trend of rising exports of financial services was not reflected in LAC, where they contracted between 2008 and 2016. The economies of Latin America and the Caribbean have significant potential to export financial services. To take advantage of this opportunity, governments in the region can work on a variety of fronts to raise their economies’ competitiveness in this area. Two specific challenges are the availability of human capital and electronic infrastructure. The former refers to the limited number of professionals that, in addition to Spanish, speak the language of the importing economies and are adequately educated and experienced in the areas associated with services exports. The latter refers to the electronic infrastructure and digital systems that facilitate the export of financial services, but also the high cost to develop communication schemes in the region. Consequently, LAC’s export dynamism in financial services will depend on long-term public policies and public-private strategies with clear objectives for promoting human capital and a competitive digital ecosystem.
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Attributing a rental value to homeowners’ dwellings is essential in different contexts, including poverty and inequality analysis, the compilation of national accounts, consumer price indexes, and estimation of purchasing power parity indexes.
... See More + The solution is often to use homeowners’ estimates of the market rent they would pay for their dwelling if they were renting it, which is usually referred to as homeowners’ self-assessed rent. Lack of alternative surveys and up-to-date and complete administrative data about dwellings’ market values typically bounds researchers to test the accuracy of homeowners’ self-assessed rent using only information from household budget surveys. Using 13 years of the Peruvian household budget survey, this paper compares two methods to assess the accuracy of homeowners’ self-assessed rent and finds that the average homeowner in Lima overestimates the market rent of her dwelling by between 8 and 15 percent. However, homeowners’ self-assessment inaccuracy fades away in most years when homeowners are compared with their most observationally similar tenants.
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Working Paper (Numbered Series) 141098 AUG 15, 2019
This report summarizes the work of the World Bank’s initiative ‘Wastewater: from Waste to Resource,’ launched in 2018 to raise awareness among decision makers regarding the potential of wastewater as a resource.
... See More + The report highlights the findings and conclusions from three technical background reports and from an in-depth analysis of several case studies. During the design phase of the initiative, seven case studies were analyzed and published in the form of short notes available here. These case studies provide international best practices examples of projects and programs that promote the implementation of one or several circular economy principles (i.e. resource recovery from waste water treatments plants, efficient plant management and cost savings, innovative financing mechanisms, integrated planning principles and additional financing flows from the final resource recovery). For each case study the following aspects were analyzed: i) circular economy and resource recovery model promoted; ii) contract arrangements; iii) financing structure; and iv) enabling factors (i.e. institutional, regulatory and technical aspects). These cases were also selected based on the sustainability of the project (i.e. projects that have been in implementation for at least 3 years with consistent results). Additional case studies are being edited for future publishing. The result of this analysis has informed the conclusions and recommendations of this report.
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This paper reviews the determinants of Latin America's uneven growth based on an accounting decomposition that breaks down countries' growth (relative to the world) into three trade-related channels: (i) an export pull measuring the traction exerted by the country's exports, (ii) an external leverage measuring the impact of the country's use of external resources, and (iii) a domestic response measuring the impact of the country's imports on its domestic income.
... See More + This decomposition brings to light three regional growth dynamics: the first is centered on commodities and South America, the second on manufactures and Mexico, and the third on services and Central America. The evidence points toward the need for a trade-oriented growth agenda that puts a premium on raising exports and making countries more attractive to people, not just capital. The latter in turn adds urgency to healing the region’s social fractures and dealing with its institutional weaknesses.
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Policy Research Working Paper WPS8871 JUN 03, 2019
