Support for economic reforms has often shown puzzling dynamics: many reforms that began successfully lost public support. This paper shows that learning dynamics can rationalize this paradox because the process of revealing reform outcomes is an example of sampling without replacement.
... See More + This concept challenges the conventional wisdom that one should begin by revealing reform winners. It may also lead to situations in which reforms that enjoy both ex ante and ex post majority support will still not come to completion. The framework can be used to explain why gradual reforms worked well in China (where successes in Special Economic Zones facilitated further reform), whereas this was much less the case for Latin American and Central and Eastern European countries.
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Policy Research Working Paper WPS6973 JUL 01, 2014
A vector autoregression model with time-varying coefficients is used to examine the evolution of wage cyclicality in four Latin American economies: Brazil, Chile, Colombia and Mexico, during the period 1980-2010.
... See More + Wages are highly pro-cyclical in all countries up to the mid-1990s except in Chile. Wage cyclicality declines thereafter, especially in Brazil and Colombia. This decline in wage cyclicality is in accordance with declining real-wage flexibility in a low-inflation environment. Controlling for compositional effects caused by changes in labor force participation along the business cycle does not alter these results.
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Policy Research Working Paper WPS6978 JUL 01, 2014
Entrepreneurship is a fundamental driver of growth, development, and job creation. While Latin America and the Caribbean has a wealth of entrepreneurs, firms in the region, compared to those in other regions, are small in size and less likely to grow or innovate.
... See More + Productivity growth has remained lackluster for decades, including during the recent commodity boom. Enhancing the creation of good jobs and accelerating productivity growth in the region will require dynamic entrepreneurs. This book studies the landscape of entrepreneurship in Latin America and the Caribbean. Utilizing new datasets that cover issues such as firm creation, firm dynamics, export decisions, and the behavior of multinational corporations, the book synthesizes the results of a comprehensive analysis of the status, prospects, and challenges of entrepreneurship in the region. Useful tools and information are provided to help policy makers and practitioners identify policy areas governments can explore to enhance innovation and encourage high-growth, transformational entrepreneurship.
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Biochar is the carbon-rich organic matter that remains after heating biomass under the minimization of oxygen during a process called pyrolysis.
... See More + There are a number of reasons why biochar systems may be particularly relevant in developing-country contexts. This report offers a review of what is known about opportunities and risks of biochar systems. Its aim is to provide a state-of-the-art overview of current knowledge regarding biochar science. In that sense the report also offers a reconciling view on different scientific opinions about biochar providing an overall account that shows the various perspectives of its science and application. This includes soil and agricultural impacts of biochar, climate change impacts, social impacts, and competing uses of biomass. The report aims to contextualize the current scientific knowledge in order to put it at use to address the development climate change nexus, including social and environmental sustainability. The report is organized as follows: chapter one offers some introductory comments and notes the increasing interest in biochar both from a scientific and practitioner's point of view; chapter two gives further background on biochar, describing its characteristics and outlining the way in which biochar systems function. Chapter three considers the opportunities and risks of biochar systems. Based on the results of the surveys undertaken, chapter four presents a typology of biochar systems emerging in practice, particularly in the developing world. Life-cycle assessments of the net climate change impact and the net economic profitability of three biochar systems with data collected from relatively advanced biochar projects were conducted and are presented in chapter five. Chapter six investigates various aspects of technology adoption, including barriers to implementing promising systems, focusing on economics, carbon market access, and sociocultural barriers. Finally, the status of knowledge regarding biochar systems is interpreted in chapter seven to determine potential implications for future involvement in biochar research, policy, and project formulation.
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Publication 88888 JUN 12, 2014
Lehmann, Johannes; Roberts, Kelli; Scholz, Sebastian M.; Sembres, Thomas; Whitman, Thea; Wilson, Kelpie
Any time there is an economic crisis; there is the very real potential that its consequences for human welfare will be severe. Thus when the developed world plunged into such a crisis in 2008 and growth rates in Latin America and the Caribbean (LAC) began to plummet, fears rose that the region will suffer rising unemployment, poverty, malnutrition, and infant mortality, among other things.
... See More + This study confirms and quantifies many of the sobering links between crisis and poverty, but it also shows how powerful good policy in stable times is in attenuating those links. It thus underscores the need for sound growth policies, good macro prudential care, fiscal balance, low debt, reasonably flexible exchange rates, and the like to help prevent and manage crises. It equally shows how effective social protection responses built on adequate existing programs can be. This study documents the effects of the 2008-09 global financial crisis on poverty in 12 countries in the LAC region, and it comes away with six big picture messages, each with much nuance and many caveats that are explained briefly in this overview.
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Publication 88887 JUN 12, 2014
Bussolo, Maurizio; Dixon, Peter; Freije, Samuel; Fruttero, Anna; Grosh, Margaret; de Hoyos, Rafael E.; Oliveri, Maria Laura; Rimmer, Maureen; Savescu, Cristina; Verikios, George
In many developing countries, the supply of skilled workers is likely to continue to be stronger than demand, and this should drive down the skill premium and reduce inequality.
... See More + Within the limitations of any exercise based on simulations, this paper finds that the recently observed reduction in inequality in Latin America may continue. Building on counterfactual scenarios projecting economic and demographic (including age and education) growth, the paper also highlights that by 2030 the long-awaited rise of the middle class in Latin America will be in full swing, as its share will be 43 percent of the total population, twice the value in 2005. This achievement is not guaranteed, as countries with large initial inequalities will have to achieve very high rates of inclusive growth. At the same time, a larger middle class is likely to exert a stronger influence on international and domestic policy making.
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Policy Research Working Paper WPS6912 JUN 01, 2014
Contaminated sites associated with economic growth and development and increased urbanization pose a growing public health and environmental problem.
... See More + Emissions and discharges, particularly uncontrolled ones, onto land can pollute the soil and the groundwater beneath, and can also affect surface water quality and sediments in nearby rivers and streams. This document is intended to summarize the rationale and the major policy, regulatory, implementation, and organizational issues involved in creating a contaminated site program, especially for low and middle income countries. The document offers alternatives regarding the design and implementation of such a program. It provides an action agenda of short- and longer-term activities to be considered when establishing a contaminated site program. In addition to providing some optional approaches for the many policy and programmatic issues, the document provides numerous references from the experience of other country programs to draw upon in considering program options. The document is intended to help support World Bank staff or other international financial institutions and assistance agencies in their dialogues with governmental officials in low and middle income countries regarding specific options and steps on developing or implementing contaminated sites programs in their countries. It is also relevant for governmental agencies in these countries responsible for site contamination and pollution management, land use planning, and site development at local and national levels. The document is organized in the following chapters: chapter one gives introduction. Chapter two is setting policy and legislative framework which highlights the development of policy and legislative purpose, principles, strategy and design, and related legislation. Chapter three is regulatory issues which presents major topics that may be the subject of regulations by a ministry or agency. Chapter four is contaminated site program management which presents management, organizational, and operational issues, including issues of coordination and partnerships within branches of government and with other stakeholders. Chapter five is action agenda for contaminated site program which provides the development of an action agenda of short- and longer-term actions to be considered in forming a contaminated site program, including creation of a national management plan for contaminated sites.
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This paper provides an overview of the impact of once-and-for-all changes in commodity prices and other prices on household welfare. It begins with a collection of stylized facts related to commodities based on household survey data from Latin America and Africa.
... See More + The data uncover strong commodity dependence in both continents: households typically allocate a large fraction of their budget to commodities and they often depend on commodities to earn their income. This income and expenditure dependency suggests sizable impacts and adjustments following commodity-price shocks. The paper explores these effects with a review of the literature. It studies consumption and income responses, labor-market responses, and spillovers across sectors. It ends up providing evidence on the relative magnitudes of various mechanisms through which commodity prices affect household (and national) welfare in developing economies.
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Policy Research Working Paper WPS6858 MAY 01, 2014
Housing matters to the livability of cities and to the productivity of their economies. The failure of cities to accommodate the housing needs of growing urban populations can be seen in the proliferation of poorly serviced, high-density informal settlements.
... See More + Such settlements are not new in the history of rapidly growing cities, their persistence results as much from policies as from economics and demographic transition. Slums have attracted most of the attention on urban housing in developing countries, and the Millennium Development Goals have given prominence to their reduction. However, urban housing issues transcend conditions in slums and are linked closely to economic activity. City economies influence housing demand, and in turn the flexibility of housing supply affects economic activity and city growth. This paper provides an overview of the policy and institutional building blocks that determine housing sector performance, drawing on studies from both developed and developing countries. It focuses on property rights, including tenure choice, housing finance, and subsidies. It also reviews the factors that affect supply: the availability of serviced land, as well as land and housing regulations. While these elements have been standard tools of housing policy, they are still the subject of considerable debate over their sequencing, policy content, and priority. There has been a great deal of emphasis over the last two decades on demand-side measures to improve property rights systems, develop housing finance, and even to introduce new subsidy systems. All these developments are important, but as this paper argues, less progress has been made in understanding and addressing the factors that constrain supply, which often thwart improvements on the demand side.
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Policy Research Working Paper WPS6876 MAY 01, 2014
Cash transfers have been demonstrated to improve education and health outcomes and alleviate poverty in various contexts. However, policy makers and others often express concern that poor households will use transfers to buy alcohol, tobacco, or other "temptation goods."
... See More + The income effect of transfers will increase expenditures if alcohol and tobacco are normal goods, but this may be offset by other effects, including the substitution effect, the effect of social messaging about the appropriate use of transfers, and the effect of shifting dynamics in intra-household bargaining. The net effect is ambiguous. This paper reviews 19 studies with quantitative evidence on the impact of cash transfers on temptation goods, as well as 11 studies that surveyed the number of respondents who reported they used transfers for temptation goods. Almost without exception, studies find either no significant impact or a significant negative impact of transfers on temptation goods. In the only (two, non-experimental) studies with positive significant impacts, the magnitude is small. This result is supported by data from Latin America, Africa, and Asia. A growing number of studies from a range of contexts therefore indicate that concerns about the use of cash transfers for alcohol and tobacco consumption are unfounded.
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Policy Research Working Paper WPS6886 MAY 01, 2014
This paper discusses the theoretical arguments in favor of and against economic globalization and, with a view to ascertaining whether Latin America may be able to capture the globalization upside, examines the trends and salient features of Latin America's globalization as compared with that of Southeast Asia.
... See More + The paper focuses on trade and financial integration as well as the aggregate demand structures (domestic demand-driven versus external demand-driven) that underpin the globalization process. It finds that Latin America is mitigating some bad side effects of financial globalization by moving toward a safer form of international financial integration and improving its macro-financial policy frameworks. Nonetheless, Latin America's progress in raising the quality of its international trade integration has been scant. The region's commodity-heavy trade structures and relatively poor quality of trade connectivity can hinder growth potential to the extent that they are less conducive to technology and learning spillovers. Moreover, Latin America's domestic demand-driven growth pattern (a reflection of relatively low domestic savings) may become an additional drag to growth by accentuating the risk of a low savings-low external competitiveness trap.
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Policy Research Working Paper WPS6837 APR 01, 2014
de la Torre, Augusto; Didier, Tatiana; Pinat, Magali
The epidemic of road injury in the Latin American and Caribbean (LAC) countries is rising at an alarming rate (40percent increase in 2010 compared to 1990) and is now one of the leading causes of death among young adults as confirmed by recent global reports on road safety.
... See More + Besides being a major public health burden, road injury also burdens the economy, costing Low and Middle-Income countries around 2 percent to 5 percent of their annual Gross Domestic Product, or GDP. To address this issue there is global recognition of the need for a systemic approach in road safety management and coordination. However, it is crucial to realize that the lack of reliable and comprehensive surveillance data impedes the prioritization of road safety among other national development challenges and priorities. Recent road safety reports have highlighted the shortcomings in the existing data systems prevalent in developing countries. The under-reporting of road death statistics by government agencies may be as high as over 100 percent of the actual numbers. To illustrate the World Bank's effort and engagement towards addressing this challenge, this note highlights the development of the first regional road safety data observatory in the LAC region fostered through twinning training arrangements among the Ibero-American countries. The goals of the effort have been to improve capacity for harmonized collection of road injury data, improve sharing of data among relevant stakeholders, and build knowledge to guide policy making and targeted public health interventions. Countries committed to the UN decade of action for road safety and its 2020 target for reducing road deaths must ensure technical expertise, in-country capacity and ownership to maintain road safety data systems adhering to international best practice standards.
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