This paper argues that relying on major policy distortions to create a domestic automotive industry through import substitution generates significant costs for the economy, in terms of foregone output, lower consumption, and reduced overall welfare.
... Exibir mais + To bring this issue into sharp relief, the paper focuses on the extreme case of an outright vehicle import ban (complemented by an export subsidy), which gives rise to a misallocation of resources that will ultimately reduce the overall productivity of labor. More specifically, a share of the labor force is diverted to the production of previously-imported vehicles, which would have not happened in the absence of import restrictions. In particular, the output of the final good goes down; consumption is lowered; and overall welfare is reduced. Importantly, the equilibrium stock of vehicles available in this economy is also reduced, defeating the purpose of the imposition of import substitution. Additionally, the creation of an automotive sector is not neutral with respect to factor prices: the resulting lower wages imply that revenues in the newly-created sector are generated at the expense of labor income. Technological change in the automotive industry might act as a countervailing force for labor misallocation, albeit only partially.
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Documento de trabalho sobre pesquisa de políticas WPS8542 AUG 07, 2018
Martins,Marco A.C.; Araujo,Jorge A. De Thompson R.Disclosed
Brazil enters the election year 2018 with an economy that is gradually recovering from the deepest recession in its recent economic history. This book is motivated by the need to understand the possible drivers of future income and employment growth.
... Exibir mais + Shifting Brazil’s production structure to be the same as that of the United States will raise productivity by just 68 percent; making all Brazilian industries work as efficiently as their counterparts in the United States will boost productivity more than four times. This book analyses some of the factors that may be behind such low productivity. Among the most important: (a) a lack of competition both internally, thanks to a business environment that favors incumbents and hampers innovation and entry, and externally, due to high-tariff and nontariff barriers to trade; (b) government policies that have concentrated on subsidizing existing firms, and distorting capital and labor markets, rather than fostering competition and innovation; and (c) fragmented government institutions for business support that have allowed policies to persist without much regard for whether or not they had shown to be effective. The book recommends a policy shift in all three areas, with the ultimate objective to change the relationship between business and the state from one governed by perks and privileges to one built on creating a level playing field that incentivizes initiative and supports workers and firms to adjust to the demands of the market. This book fits into the context of a growing policy debate about what should be Brazil’s future development model.
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Brazil enters the election year 2018 with an economy that is gradually recovering from the deepest recession in its recent economic history. This book is motivated by the need to understand the possible drivers of future income and employment growth.
... Exibir mais + Shifting Brazil’s production structure to be the same as that of the United States will raise productivity by just 68 percent; making all Brazilian industries work as efficiently as their counterparts in the United States will boost productivity more than four times. This book analyses some of the factors that may be behind such low productivity. Among the most important: (a) a lack of competition both internally, thanks to a business environment that favors incumbents and hampers innovation and entry, and externally, due to high-tariff and nontariff barriers to trade; (b) government policies that have concentrated on subsidizing existing firms, and distorting capital and labor markets, rather than fostering competition and innovation; and (c) fragmented government institutions for business support that have allowed policies to persist without much regard for whether or not they had shown to be effective. The book recommends a policy shift in all three areas, with the ultimate objective to change the relationship between business and the state from one governed by perks and privileges to one built on creating a level playing field that incentivizes initiative and supports workers and firms to adjust to the demands of the market. This book fits into the context of a growing policy debate about what should be Brazil’s future development model.
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After a two-year recession, something last experienced over three decades ago, the Latin America and the Caribbean (LAC) region is growing again.
... Exibir mais + The challenge now is to accelerate and sustain growth to continue making progress on the social front as in the first decade and a half of the new century: between 2000 and 2014 the region managed to reduce poverty (US$4 a day poverty line) from 42.9 percent to 23.3 percent, cutting the number of poor people by 80 million at a time when the Latin American population increased by 100 million. A renewed emphasis on productivity comes up during any discussion of LAC’s growth agenda. After all, labor productivity in the region has stalled at around 30 percent of that of the U.S. Moreover, improvements on the productivity front would result not only in faster growth but also, as basic economic theory suggests, in better salaries for the workforce, therefore further contributing to poverty reduction and shared prosperity. But why is there such a gap in LAC’s productivity with respect to the developed countries? One factor is the large infrastructure investment and service gaps. Infrastructure investments can be a powerful engine for reviving and sustaining growth. A recent regional study on the determinants of growth in LAC indicates that infrastructure has been the main structural driver of growth in the region. Yet, LAC governments are well aware that public resources are not enough to satisfy infrastructure needs, especially in the context of ongoing fiscal adjustments across the region and the enormous need for infrastructure investment: an estimated $180 billion per year investment gap. And LAC governments are also aware that the private sector can play a central role to finance the existing gap. Not surprisingly then, LAC has made considerable strides in attracting private sector investments in infrastructure: the region has the largest stock of active Public-Private Partnerships (PPP) investments and the largest pipeline of infrastructure projects by volume globally, reflecting the central role of the private sector in the regional development agenda. Going forward, LAC countries will benefit from an improved environment for private investments, as well as for further developing a robust pipeline of bankable projects. This report showcases the different ways the World Bank Group has been part of these efforts to support the mobilization of private financing for infrastructure in the region, following what authors call the Cascade approach. These encompass everything from policy and regulatory advice to structuring support, guarantees schemes and financing. Country-specific examples presented in this report illustrate how private financing mobilization in LAC has been supported by the WBG. While not exhaustive, these examples are representative of the different strategies and instruments used by governments at the central and subnational levels to help leverage private sector participation in infrastructure. The WBG stands ready to continue to assist the region in that endeavor with financial support, as well as knowledge and convening services.
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Documento de Trabalho 123738 FEB 01, 2018
Abousleiman,Issam A.; Araujo,Jorge A. De Thompson R.Disclosed
This paper brings together the main findings and policy implications of two recent World Bank regional reports on economic growth in Latin America and the Caribbean: Araujo, Vostroknutova, Wacker and Clavijo, eds
... Exibir mais + . (2016) and Araujo, Vostroknutova, Brueckner, Clavijo, and Wacker (2016). In doing so, the paper focuses on finding the right balance between micro- and macro-inference when thinking about growth in Latin America and the Caribbean. The paper documents the region's growth performance over the past decade, highlighting the roles played by the commodity boom, macroeconomic stabilization and structural reforms. It notes that, despite faster growth during the first decade of this century, the region failed to achieve sustained convergence towards higher income levels. The paper points out that the persistent income gap could be reduced through: (i) increasing focus on closing the efficiency gap – beyond mere factor accumulation; (ii) eliminating distortions that cause misallocation of resources will also improve the incentives to innovate; (iii) identifying the main country-specific constraints to growth instead of looking for universal recipes; (iv) containing macroeconomic volatility, thereby alleviating the negative impact of persistent poverty on growth; and (v) improving the composition of public spending.
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Documento de Trabalho 120956 NOV 01, 2017
Vostroknutova,Ekaterina; Wacker,Konstantin M.; Araujo,Jorge A. De Thompson R.Disclosed
The Growth Challenge of Latin America andthe Caribbean shows that Latin America and the Caribbean's growthperformance over the past decade cannot be reduced to the commodityboom: growth-promoting reforms that strengthened financial development,increased trade openness and improved infrastructure development alsoplayed a significant role and can continue doing so.
... Exibir mais + On the basis of theeconometric analysis of panel data from the 1970-2010 period for 126 countries, Beyond Commodities shows that, although the commodity boom facilitated growth in most of the region, it did not determine it. Domestic progrowth policies and the maintenance of a sound macrofiscal framework played a central role in explaining the region's good performance during the past decade. The book also shows that new growth "stars" such as Colombia, the Dominican Republic, Panama, and Peru emerged during this period. Inaddition, a benchmarking exercise reveals which policy gaps will lead to the highest potential growth-payoffs for each country and helps identify potential trade-offs. With the worsening of external conditions, the authors conclude that the countries of Latin America and the Caribbean have no choice but to turn their attention to domestic drivers to continue growing,given that the structural reforms agenda remains unfinished.
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Publicação 1101101 NOV 09, 2016
Araujo,Jorge A. De Thompson R.; Vostroknutova,Ekaterina; Brueckner,Markus; Clavijo,Mateo; Wacker,Konstantin M.Disclosed
The countries of the Latin America and the Caribbean (LAC) region like other emerging economies, have benefited from a decade of remarkable growth and some income per capita convergence toward the United States and other high-income countries.
... Exibir mais + Yet, despite this recent progress, LAC still faces a significant per capita income gap with the developed world. To narrow this income gap, it is critical that the region reduce its efficiency gap. To that end, the studies in this volume seek to identify the main candidates to explain the differences in efficiency between LAC and the United States, as well as to look for factors that drive convergence at all levels of the economy. Theory suggests two main channels through which the efficiency gap can be affected: technology adoption or innovation and resource allocation. The analysis in this volume shows that technology adoption explains about one-fifth of the efficiency gap, leaving the rest to be explained by misallocation of resources. Drawing on the findings of the studies in this volume, several broad policy directions emerge: (i) increasing focus on closing the efficiency gap - beyond mere factor accumulation - is critical to reduce the income gap and improve LAC’s convergence prospects; (ii) eliminating distortions that cause misallocation of resources will also improve the incentives to innovate; and (iii) reducing macroeconomic volatility will alleviate the negative impact of the poverty gap on growth.
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Publicação 104285 APR 08, 2016
Araujo,Jorge A. De Thompson R.; Vostroknutova,Ekaterina; Wacker,Konstantin M.; Clavijo Munoz,MateoDisclosed
Even nearly ten years of solid growth cannot guarantee long-term income convergence. The countries of the Latin America and Caribbean region (LAC), like other emerging economies, have benefited from a decade of remarkable growth and some income per capita convergence towards the United States and other industrialized countries.
... Exibir mais + Yet, despite this recent progress, LAC still faces a significant per capita income gap with the developed world. The studies in this volume contribute to the ongoing debate on the reasons for this persistent income gap and the potential drivers of convergence, and propose some broad avenues for reform.
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Documento de Trabalho 97885 JUL 01, 2015
Araujo,Jorge A. De Thompson R.; Vostroknutova,Ekaterina; Wacker,Konstantin M.; Clavijo Munoz,MateoDisclosed
The Latin America and Caribbean (LAC) region has seen a decade of remarkable growth and income convergence. Growth has been a key driver for reducing poverty and boosting shared prosperity.
... Exibir mais + It has been debated how much of this decade of growth has been driven by policy reforms and how much was due to the favorable external conditions. While external factors were supportive and relevant, the effect of domestic policies was just as relevant for explaining LAC's recent growth performance. The emphasis of domestic policy has shifted from stabilization policies to structural policies. In addition, a benchmarking exercise reveals which policy gaps will lead to the highest potential growth-payoffs for each country and helps identify potential trade-offs. The authors analyze growth in LAC using descriptive statistics and growth econometrics. The authors use these results for explaining the pattern of growth in LAC over the last decade, for looking ahead, and to identify potential policy gaps.
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Economia geral, macroeconomia e estudo do crescimento 91015 DEC 01, 2014
Araujo,Jorge A. De Thompson R.; Brueckner, Markus; Clavijo Munoz,Mateo; Vostroknutova,Ekaterina; Wacker,Konstantin M.Disclosed
Since the mid-1990s, Brazil has struggled, with limited success, to reform its intergovernmental financing arrangements. Every four years, the electoral cycle brings promises of much needed reforms.
... Exibir mais + Recently, Brazil had an unusual window of opportunity to promote such reforms, brought about not by another electoral cycle, but by Supreme Court rulings and changes to its oil exploration regime. This note takes stock of the realized reforms and simulates their impact for state governments in Brazil.
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Informativo 88640 JUN 01, 2014
Araujo,Jorge A. De Thompson R.; Barroso,Rafael ChellesDisclosed
Paraguay has achieved significant progress in terms of fiscal policy over the past decade. Despite this progress on fiscal reform, three major challenges remain: 1) a volatile macroeconomic environment; 2) still insufficient fiscal resources; and 3) high levels of poverty and inequality.
... Exibir mais + In light of these three challenges, the objective of this report is to examine the extent to which fiscal policy in Paraguay has contributed to the social progress of the past decade, and can serve the purpose of further reducing poverty and enhancing shared prosperity in the years to come. Overall, fiscal policy can contribute to containing poverty and inequality by buffering the negative impact of financial and economic crises on vulnerable parts of the population. Moreover, tax and expenditure policies that redistribute from high- to low-income households in a well-targeted manner can also contribute to these goals. The current structure of the tax system appears suboptimal in light of the identified challenges. Even though the reliance on indirect taxes insulates public revenues from economic volatility to a certain extent, it imposes high costs associated with sufficiency and equity of the system. Adequate taxation of the agricultural sector is needed to level the playing field for business development in all sectors and to address the insufficiency of taxes. While fiscal policy contributes less to poverty reduction and shared prosperity in Paraguay than in the other countries analyzed for this study, direct transfers are well targeted. Overall, Paraguay's fiscal system is less progressive than in other Latin American countries analyzed. Paraguay's reliance on indirect taxes makes its overall tax system regressive. The sufficiency and efficiency of social expenditures have to be considered within the context of fiscal prudence, which is a continuous task. This is especially important in light of the recent expansionary fiscal stance. Only if the Government is able to sustain fiscal prudence in the future, will it be able to maintain macroeconomic stability and performance.
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Paraguay has achieved significant progress in terms of fiscal policy over the past decade. Despite this progress on fiscal reform, three major challenges remain: 1) a volatile macroeconomic environment; 2) still insufficient fiscal resources; and 3) high levels of poverty and inequality.
... Exibir mais + In light of these three challenges, the objective of this report is to examine the extent to which fiscal policy in Paraguay has contributed to the social progress of the past decade, and can serve the purpose of further reducing poverty and enhancing shared prosperity in the years to come. Overall, fiscal policy can contribute to containing poverty and inequality by buffering the negative impact of financial and economic crises on vulnerable parts of the population. Moreover, tax and expenditure policies that redistribute from high- to low-income households in a well-targeted manner can also contribute to these goals. The current structure of the tax system appears suboptimal in light of the identified challenges. Even though the reliance on indirect taxes insulates public revenues from economic volatility to a certain extent, it imposes high costs associated with sufficiency and equity of the system. Adequate taxation of the agricultural sector is needed to level the playing field for business development in all sectors and to address the insufficiency of taxes. While fiscal policy contributes less to poverty reduction and shared prosperity in Paraguay than in the other countries analyzed for this study, direct transfers are well targeted. Overall, Paraguay's fiscal system is less progressive than in other Latin American countries analyzed. Paraguay's reliance on indirect taxes makes its overall tax system regressive. The sufficiency and efficiency of social expenditures have to be considered within the context of fiscal prudence, which is a continuous task. This is especially important in light of the recent expansionary fiscal stance. Only if the Government is able to sustain fiscal prudence in the future, will it be able to maintain macroeconomic stability and performance.
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The Economic Policy and Poverty Reduction Group of World Bank Institute (WBIEP) conducted a core course on economic growth in Washington, D.C. from January 20-21, 1999.
... Exibir mais + This is the third offering of this course; previous offerings were held in Washington, D.C. in February and June, 1998 (This course has been offered in different forms in other countries at previous times. This evaluation reviews the three D.C. offerings due to the similarities among the courses). The two-day course was aimed at strengthening participants' analytical and research skills in the field of economic growth. The course was designed to provide both a theoretical framework for and empirical studies of the determinants of economic growth, as well as an understanding of policy issues for achieving equitable and sustainable growth. Thirty-two participants attended this course, all World Bank staff. The course included 12 women, 37.5 percent of all participants.
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The Economic Policy and Poverty Reduction Division of The World Bank Institute (WBIEP) conducted a core course on economic growth and poverty reduction: theory, evidence, and implications for Central Asia in Istanbul, Turkey, from January 25 to February 5, 1999.
... Exibir mais + The main objective of the course was to increase participants' awareness about policies that facilitate economic growth and development. Participants were introduced to the latest issues and discussions on the linkages between economic development and poverty alleviation, learning several key issues such as the determinants of economic growth, the role of institutions, the impact of macroeconomic factors, and worldwide income distributions. The course was attended by a total of 30 participants, including 28 (93.3 percent) academics and researchers from major universities and research institutions in Central Asia (Kazakhstan, Tajikistan, Uzbekistan, and the Kyrgyz Republic), as well as 2 staff (6.7 percent) from the Bank's resident missions in Kazakhstan and Uzbekistan. Sixteen participants (53.3 percent) were women. At the time of the end-of-course evaluation, the course organizer dropped one of the questions from the questionnaire since the subject of the question was not sufficiently covered in the course. Participants were therefore asked to respond to only 10 questions. The questionnaire for the course was completed by all participants except one, a total of 29 respondents (96.7 percent), including all 16 women participants.
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The Economic Policy and Poverty Reduction Division of World Bank Institute (WBIEP) conducted a core course on economic growth and poverty reduction: theory, evidence, and implications for South Asia in Colombo, Sri Lanka, from October 19-23, 1998.
... Exibir mais + The purpose of the course was to introduce participants to both theoretical approaches and the most recent developments in the area of the linkage between economic growth and poverty alleviation. The course targeted senior and mid-level government officials of South Asian countries, particularly those from ministries of finance and planning, central banks, and academics and researchers from the South Asia region, as well as Bank staff in the South Asia resident missions. The course focused on policy and research issues pertinent to South Asia, so that participants could develop policy recommendations for their own countries. The 5-day course was delivered through a series of lectures, including country case presentations, concluding with a panel discussion on the last day. A total of 40 participants from 5 countries attended this course, including 7 (17.5 percent) women.
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The Macroeconomic Management and Policy Division of Economic Development Institute (EDIMP) conducted a core course on new issues in economic growth in Washington, D.C. from June 8-12, 1998.
... Exibir mais + The five-day course was aimed at strengthening participants' analytical and research skills in the field of economic growth. The course was designed to provide both a theoretical framework and empirical studies of the determinants of economic growth, as well as the understanding of policy issues for achieving equitable and sustainable growth. Fifty-one participants attended this course, consisting of selected participants from partner institutions in developing countries and World Bank economists. The course was evaluated by the EDI evaluation unit (EDIES) using an end-of-course questionnaire. The questionnaire was completed by thirty-eight respondents, 74.5 percent of the total number of participants. There were two sections in the questionnaire. The first section asked respondents to rate the extent to which the course met performance objectives. The second section asked the level of respondents' knowledge about topics covered in the course, before and after completing the course, based on self-assessment.
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