CEPAL Review - Current Issue

This article presents a stock-flow consistent model for the Central American economies. It is part of a project to develop a stock-flow consistent workhorse model applicable to different country cases in Latin America and the Caribbean. The model’s logical and behavioural relationships are based on a set of stylized facts characterizing the Central American economies. The model includes five institutional sectors (consumers, firms, the government, the central bank and the rest of the world). The five sectors trade in seven financial assets: (i) public debt issued in domestic and foreign currencies, (ii) private debt issued in domestic currency, (iii) debt issued by the rest of the world, (iv) bank loans to the private sector for investment and consumer credit, (v) government and private deposits, (vi) loans from the rest of the world borrowed by the domestic financial sector, and (vii) cash. Given the importance of climate-related effects for Central America, our stock-flow model includes an ecological module.

This work analyses the effects of wage earners’ income tax on vertical equity and income distribution in El Salvador, by assessing the two most recent changes in income tax —the 2011 reform and the 2015 amendment— in light of a comparative methodology based on indices of tax progressivity and redistributive power. The impact of these measures is estimated using microsimulation techniques. The results show that the tax structure in 2017 is weakly progressive and has no impact on income distribution in El Salvador. On the contrary, the differential treatment that the tax system affords to high incomes undermines any possible effect of the income tax on vertical equity and income distribution.

Social protection programmes have become an effective and indispensable tool for improving the living standards of the poor and vulnerable. This article examines the five main cash transfer programmes in Colombia and studies their history, targeting, coverage, operation and the fiscal commitments they demand. It also reviews the impact evaluations of these programmes and their results on various social indicators. The article is a first attempt to consolidate the information that exists on the subject in Colombia, in order to allow a comprehensive understanding of the scope and challenges of these programmes and to identify possible areas for research and improvement.

This study examines the expected effects of climate change on the current account of Colombia. We present a literature review that explains how the associated risks affect the balance of payments. We then project the current account balance until 2050 in different climate scenarios to establish whether the impact of these risks could affect the country’s current account over the long term. Our results indicate that, compared with a scenario in which current climate policies are maintained, achieving net zero emissions by 2050 could widen the current account deficit by the equivalent of 4.6% of GDP. Under a scenario in which the transition is delayed, the cost would be equivalent to 2.6% of GDP. This finding can be attributed to a permanent drop in oil prices and an expansion of public debt, resulting from a decline in global demand for fossil fuels and additional spending to meet environmental targets.

The aim of this article is to analyse foreign capital and national development in the debate between Celso Furtado and Maria da Conceição Tavares between 1964 and 1982. To this end, it investigates how Furtado’s analytical radicalization, following the 1964 coup d’état in Brazil, enabled him to make a pioneering interpretation of the transnationalization of capital in Latin America and the Caribbean, despite Tavares’ criticism of his stagnationist thesis. Moreover, although Tavares was considered to have won the debate with Furtado, this study reveals how her approach failed to define the limits of peripheral industrialization when capital in the region was under foreign control.

The objective of this study is to measure the effects of global value chain participation on the total factor productivity of the Brazilian economy, using heterogeneous dynamic panel models and methods suitable for diagnosing short-run and long-run effects. The study has two innovative features: it estimates the impact of global value chains on Brazil’s sectoral total factor productivity by disaggregating the indicators of simple and complex value chain participation developed by Wang and others (2017), and it uses a novel methodology to analyse the relationship between participation in global value chains and sectoral total factor productivity in Brazil. In the long run, this participation appears to generate productivity gains whatever indicator is considered, with the largest long-run effects arising when activities are carried out in complex chains. Positive effects are found in 15 of the 31 sectors analysed.

This study examine the impact of changes in the sectoral composition of exports and in trade partners on the value added of Brazil and Mexico between 2000 and 2019, within the framework of Latin American structuralism. Employing quantitative input-output structural decomposition analysis, we identify shifts in value added coefficients, production techniques, domestic demand and exports (level, product mix and trade partners). The research brings out a significant correlation between changes in trade partners and the structure of the export basket. Both Brazil and Mexico display export concentration, geographically and sectorally. While alterations in the export basket and trade partners had a negative impact on Mexico’s value added growth, Brazil experienced a positive effect. This finding for Brazil is attributed in part to its specialized agricultural and mineral exports to China. Conversely, Mexico’s specialization in transport equipment exports to the United States and Canada contributed to its unfavourable outcome.

This study evaluates the impact of financial incentives for corporate innovation on the performance of Mexican companies. It also analyses the priorities underlying the incentive programmes by constructing a profile of the types of firm that are the main recipients of this kind of support. Propensity score matching —in this case, matching based on the probability of receiving such support— of data from the 2017 Research and Technological Development Survey (ESIDET) is used for this purpose. When corporate and governments funds are both taken into account, the results indicate that public funding fosters higher levels of expenditure on research and development, but when public funds are deducted from the total, the results show that these incentive programmes have had no net effect on the initial foreseen level of private research and development expenditure. The findings also indicate that government funding has a positive impact on corporate performance and in terms of human capital and that the types of firm that tend to receive this kind of support more often are in the services sector, those that are more innovative, larger and more competitive, and those that engage in the development of technological applications that are nearer to the market rather than those devoted to basic research.

The general objective of this study is to identify the combinations of eco-innovation drivers associated with Brazilian municipalities in which a large proportion of farms report that they engage in organic farming. To this end, a theoretical review identified 11 drivers, which were classified as internal and external to the farms. The data were obtained from the 2017 agricultural census, published by the Brazilian Institute of Geography and Statistics (IBGE). Qualitative comparative analysis was used to identify the combinations of drivers associated with organic farming. The results showed that no single driver can be considered necessary. Nonetheless, two combinations of internal drivers and three combinations of external drivers were found to be sufficient to explain the existence of a large proportion of properties engaged in organic farming. These findings contribute to the literature on eco-innovation in agriculture and to the monitoring of public policies.

The objective of this article is to understand the class, race and gender profile of persons who would be most affected if the Brazilian State were to stop providing health and education services. The article begins with a review of class, race and gender inequalities in Brazil, and then examines the role of the State in that regard. The second section presents an analysis of public education and health expenditures through a discussion of the class, race and gender profiles of users and a simulation of the elimination of public health and education spending. The third section contains concluding remarks. The article proposes that the elimination of public services would plunge poorer, Black2 and female populations (categories which often overlap) into severe financial hardship and negatively affect their well-being and could deepen poverty or lead to extreme poverty.

In order to facilitate the submission, consideration and publication of articles, the editorial board of the CEPAL Review has prepared the following information and suggestions to serve as a guide for future contributors.