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Reduced Inequalities
The market and water management reform in Peru
This article examines the unsuccessful attempts made in the 1990s to introduce a market for water in Peru. This reform was thwarted because market operations were identified with water rights privatization even though a market can perfectly well operate on a basis other than that of private rights with the State retaining full ownership of the resource. The argument made here is that if these shortcomings were corrected the creation of a water market would be desirable to improve allocation and management of water and to deal with the increasingly serious difficulties associated with the administration of water access the lack of investment incentives and serious problems of efficiency and equity. The economic advantages and disadvantages of a water market are analysed as are the legal and regulatory prerequisites for promoting the kind of market that would really improve water allocation in the increasingly necessary institutional reform of this sector in Peru.
Spatial segregation, employment and poverty in Montevideo
This article looks at two processes that are affecting the characteristics of poverty in the city of Montevideo: the weakening of lower-skilled workers’ attachments to the labour market and the growing concentration of such workers in neighbourhoods with a high density of poverty. While far from conclusive the results suggest the advisability of further research into the relationship between changes in the social morphology of cities and the segmentation of their labour markets. If further research confirms both a tendency towards growing polarization in the spatial distribution of social classes in cities and the presence of feedback mechanisms reinforcing the social isolation of residents in the most disadvantaged neighbourhoods it will be safe to say that these processes if not effectively countered will irreversibly widen the already excessive inequalities that affect large Latin American cities.
The influence of capital origin on Brazilian foreign trade patterns
This article aims to determine whether the geographical pattern of the external trade of foreign-owned enterprises in Brazil differs from that of domestic enterprises and whether in the case of foreign enterprises the region of origin of their capital is an important factor in determining that pattern both in terms of the origin and destination of their imports and exports and with regard to the technological content of the pattern. The methodology employed was panel analysis applied to a representative set of enterprises using trade data broken down by region for 1989 1997 and 2000.
The globalization of the health-care industry: Opportunities for the Caribbean
The globalization of the health-care industry is proceeding. It is being driven by the high cost of health care in the developed countries compounded by the steep rise in demand for health care as a result of the ageing of populations in these countries and the increasing availability of health-care services in developing countries at less expensive rates than in developed countries. Increasingly patients are sourcing health care globally and opting for the most affordable treatment. In a growing number of fields of treatment the most cost-effective option is travelling to a developing country. The provision of health care has significant potential for those developing countries that can provide world-class services and facilities at internationally competitive prices. The proximity of the Caribbean to the United States gives it an additional advantage in meeting the rapidly growing demand for health care originating in that country.
Towards an integrated vision for dealing with instability and risk
Evolution of the link between selective anti-poverty policies and social sectors policies
This conceptual and historical analysis of paradigmatic social policy experiences in the region reveals some fundamental landmarks in the evolution of the link between selective anti-poverty policies and social sector policies. These landmarks are associated with major changes in targeting policies and with a number of universal social policy reforms. Special attention is given to the redistribution-with-growth approach; subsequent reductionist targeting proposals which have undergone shifts in conceptual and effective terms over the last two decades; and the concern for interaction with social sectors displayed by some present-day conditional transfer programmes which stand out in the region because of their scale. Two related trends observed in fields that go beyond the effort to combat poverty are also analysed: the reductionist social risk management proposal and in the opposite direction the introduction of health guarantees.
The accumulation process and agrofood networks in Latin America
Within the context of the evolution of world markets and new models of trade openness several agrofood product lines in MERCOSUR countries have shown strong dynamism in recent decades becoming focal points (axes) of accumulation and economic growth. The expansion of production and the higher levels of competitiveness achieved have been based on the organization of these product lines in networks or complexes; on the adoption of technology packages from abroad with minimal local adaptation as part of the globalization of new paradigms; on the emergence or consolidation of groups of big firms in the main stages of these networks and on clearly defined forms of insertion in external markets. This article argues that the transnationalization of relevant segments and markets of these complexes affects the possibilities of local or regional development in particular the generation of locally dense and diversified production networks with equitable distribution of rents income and profits.
Adolescent reproduction: The case of Chile and its policy implications
Adolescent fertility and maternity are a source of concern in the Latin American and Caribbean region because they imply situations of adversity have not gone down as in other age groups and are more frequent among poor teenagers. Analysis of the micro-data from the last three censuses in Chile also shows: i) a generalized tendency for adolescent maternity to be out of wedlock; ii) the protective effect of staying in school which comes into play after passing an educational threshold which is rising with time; iii) the leading role played by the parents of the households where most adolescent mothers live and iv) the need for specific programmes and integral actions to reduce adolescent maternity since although access to information and sexual health and reproduction services avoids pregnancies it is not enough when there is a lack of alternatives to maternity or there are cultural and psychological obstacles to the proper use of contraceptive methods.
Central bank independence and its relationship to inflation
This paper builds on earlier studies of central bank independence (CBI) making a comparison of the rankings of central banks for 15 countries through three different indices. The analysis reveals that there is no shared concept of CBI and that the indices are a measure of the inflation bias. The Brazilian case is used as an example with the objective of examining the impact on inflation of an increase in independence over time as measured by Cukierman’s index. The findings indicate that CBI is a consequence of the conduct of monetary policy and that it is not an adequate framework for developing credibility.
The monetary pendulum in Mexico
First World priorities and the need for nations to coexist in harmony have given rise in each period to a set of rules constituting the international economic order. This is a shifting order in which national goals move alternatively towards and away from those of an international nature. The objective of the gold standard was to uphold monetary convertibility if necessary at the expense of national objectives. By contrast the Bretton Woods system inverted the terms of the equation by making governments responsible for employment and growth. The monetary pendulum is now swinging back again from nationalism to cosmopolitanism. In the case of Mexico owing to failures of adaptation this latest shift has translated into an all-out struggle against inflation that has brought the country to a state of chronic near-stagnation leaving it trailing in the rear of the world development process.
The technical skills of information technology workers in Argentina
This article makes an assessment of Argentina’s human resource skills in the field of information technology (IT). In various of the country’s government business and academic domains the quality and potential of domestic human resources in this area is taken for granted- a belief based on the country’s rich yet contradictory IT history but not founded on an analysis of the corresponding skills. This study aims to develop and apply a methodology to evaluate the skills of IT workers and highlight their problems and potentials using the results of an electronic survey. The current features and heterogeneity of those human resources are interpreted in the light of the progress and setbacks experienced by the activity during the course of its evolution.
Inequality in Central America in the 1990s
This study seeks to answer two questions: how and why has the distribution of labour income changed in Central America? and why does Costa Rica display greater equity? In order to answer these questions a technique based on the estimation of earnings equations is used. The direction of the changes in inequality is not uniform and depends on the indicator used. Although only Costa Rica and Guatemala show an unambiguous deterioration in the 1990s there are some phenomena common to all the labour markets studied that have contributed to increasing inequality. The most important of these is the increased dispersion of the number of hours worked caused by increasing proportions of part-time and overtime workers in all countries. There are two main reasons for the lower relative inequality in Costa Rica: education is distributed more equally and wage differences between rural and urban areas are smaller. These results suggest that public policies that universalize primary education and provide economic and social infrastructure to rural communities contribute to reducing inequality.
Brazilian fiscal institutions: The Cardoso reforms, 1995-2002
This paper looks at Brazil’s fiscal policy during the two administrations of President Fernando Henrique Cardoso: 1995-1998 and 1998-2002. It stresses that the authorities’ austere attitude was as important as institutional and structural reform for the fiscal adjustment that followed the 1998-1999 crisis. The principal cause of the fiscal deterioration in 1995-1998 was the reduction in the primary balance rather than the increase in the interest burden while the fiscal adjustment in 1999-2002 was largely due to increased revenues as primary public expenditure by the federal government continued to grow in real terms. We consider the outlook for fiscal sustainability and conclude that to preserve the country’s hard-won fiscal discipline the austere fiscal attitude shown recently by the authorities should be permanently embedded into fiscal institutions.
Celso Furtado’s contributions to structuralism and their relevance today
This article examines Celso Furtado’s three main analytical contributions to structuralism: (i) the historical-structural method which incorporates the histories of Brazil and other Latin American countries in structuralist formulations; (ii) the belief that underdevelopment in the Latin American periphery has tended to persist over long periods owing to the difficulty of overcoming underemployment and to inadequate diversification of production; and (iii) the idea that the pattern of investments in the periphery is predetermined by the composition of demand which mirrors and tends to preserve income and wealth concentration. Events in Latin America in the past twenty-five years show that Furtado’s analysis has lost none of its relevance.
Systemic governance and development in Latin America
The capacity of political regimes to formulate and implement policies in the common interest appears to be a crucial factor of development. Public institutions in Latin America are often characterized by a lack of common interest orientation. As a result most countries of the region are ill-prepared to meet the challenges of global market integration and knowledge-based development. Two approaches have been particularly influential in linking institutions to economic development: the good governance approach originally put forward by the World Bank and the systemic competitiveness approach introduced by the German Development Institute. Drawing on insights from both concepts this paper presents a framework for the assessment of reform blockades and propensities in given political systems. This is the “systemic governance” approach and it focuses on the capacity to generate and implement decisions in the common interest at all levels of the political system. In order to promote second-generation adjustment reforms the systemic character of governance has to be grasped.
A low-growth model: Informality as a structural constraint
After years of reforms and unending debate the question remains unanswered: why is Latin America not growing more? The present article approaches the subject from an unconventional perspective presenting the persistence of informality as a structural barrier to growth. As an analytical frame of reference it introduces a 2 x 2 model of growth in which the economy comprises just two sectors the formal and the informal. The model presents the links between the growth pattern of the formal sector and the dynamics of the informal sector and between these and the pattern of growth in the overall economy. Adverse specialization patterns and an unfavourable international trade profile are perpetuating informality. Thus export-led growth most resembles an enclave model which does not even guarantee high growth since the dynamic of the informal sector which accounts for about half the urban workforce adversely affects the performance of the whole economy.
Less volatile growth? The role of regional financial institutions
The volatility of economic growth in the countries of Latin America and the Caribbean has been exacerbated by a lack of suitable instruments for smoothing external shocks. Difficulties with the provision of emergency financing and the development of financial markets capable of trading government securities that incorporate better contingency mechanisms have contributed to economic volatility. To identify routes towards progress with these two issues in the Latin American context the present article examines the role that could be played by regional and subregional financial institutions always bearing in mind that while these can supplement global institutions they cannot supplant them.
Foreign direct investment and development: The MERCOSUR experience
This article analyses the impact of foreign direct investment (FDI) on the MERCOSUR countries in the light of key variables such as productivity foreign trade innovation and growth. The macroeconomic impact is not found to have been significant whereas the microeconomic effects seem to have been more noticeable though varied. Generally speaking the subsidiaries of transnational corporations operate at higher levels of productivity engage in more international trade and are more innovative than local companies. The indirect effects of FDI on the other hand are less clear. The sign (positive or negative) and magnitude of productivity spillovers to domestic competitors vary apparently depending on the characteristics of the local businesses and on the markets in which they operate. Finally only in Brazil is there evidence of spillover effects —although those effects have been both positive and negative— on the export activities and innovation of local companies as well as productivity spillovers from foreign subsidiaries to their national suppliers.
The new urban poverty: Global, regional and Argentine dynamics during the last two decades
This article analyses the various dimensions of the “new poverty” which emerged during the 1980s and 1990s. It begins with a review of the definitions of the term in Europe the United States and several Latin American countries. The case of Argentina is then examined paying close attention to the pauperization of the middle class in that country at several points between the mid-1970s and the crisis of 2001. Structural poverty —an older phenomenon— is used as a point of reference to describe the characteristics of the new impoverishment the adaptation strategies evolved to address it using cultural and social capital the erosion of collective social identity and the urban dimension of pauperization. The article concludes with an analysis of the transformations experienced by the new poor since the issue was first examined as well as the specific challenges it poses for public policy.
Poverty and employment in Latin America: 1990-2005
What factors led to the reduction of poverty in Latin America from 1990 onwards? This article looks into the key factors that have played a part in reducing poverty in the region including in particular employment and remuneration for work. With data from household surveys the authors discuss the ways in which changes in the working age population in its participation in economic activity in employment rates and in income from work and other sources affect the per capita incomes of families in the lowest deciles of income distribution and hence in poverty indicators.