CEPAL Review - Volume 2007, Issue 92, 2007

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.

This article examines the effect of training on competitiveness in the manufacturing sector, drawing a distinction between industries with differing technological and productive characteristics. Using a systemic approach, it studies activities within firms and the impact that training has on them, as well as the organizational and institutional environment that supports training and the effect of the latter on the locality as a whole. An analysis is performed at two levels. At the firm level (micro analysis), econometric tools are used to study the manufacturing sector in Mexico. At the regional level (meso analysis), the electronics industry in one region of Mexico is studied. Empirical evidence shows that enterprise training has different effects on competitiveness in industries with different technological characteristics. It also has a positive impact on the region through knowledge diffusion.

Youth employment problems affect not only the welfare of young people themselves but also some key elements of socio-economic development in general. This article examines the circumstances, origins and consequences of these problems and reviews the statistical information available on recent trends in youth employment variables. The figures show that the occupational position of young people has deteriorated in absolute terms along with labour markets generally and that, contrary to some expectations, it has not improved in relative terms either. Working conditions are also found to vary greatly by education level, gender and household characteristics, among other factors. The article then identifies a number of tensions between the subjective perceptions of the young and the reality of the labour market, and reviews options for improving the youth employment situation with regard to the issues of employability, equal opportunities for young men and young women, entrepreneurship and employment creation.

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.

In recent years, issues concerning social protection (particularly pension systems) have become important items on the economic and political agenda in developed and developing countries alike, as demographic projections cast doubt on the financial sustainability of many pension systems currently in place. Substantive reform of pension systems in the Caribbean, however, has yet to materialize. In part, this may be a consequence of the limited amount of research that has been done on pension systems in the Caribbean, since this means that the authorities have not been able to refer to the literature to obtain information about how to tackle the issue of social protection in an environment with similar geographic and geo-climatic characteristics. This paper aims to fill this gap by examining the current status of public pension systems, analysing their recent performance and the challenges faced by schemes in the region, and suggesting ways forward.

This paper presents the new system of dual taxation on income that has been introduced in Uruguay to replace the incomplete schedular system applying before. The new system strengthens a pillar of taxation defined as broadly based and capable of generating substantial and stable tax revenues in a country where 60% of fiscal income is consumed by pension and interest payments; in addition, the new system redistributes some 2.5% of total household income. The paper describes the development of the system for taxing income, focusing especially on the four changes it underwent during the twentieth century. It also compares the different models of income tax in use today: (i) the traditional synthetic model, based on the Haig-Simons definition of income; (ii) the flat rate model, derived from Hall and Rabushka’s consumption tax; (iii) the Nordic dual model, which provides for separate taxation of capital income at a fixed rate and earnings at progressive rates; and (iv) the Uruguayan dual model.

Remittances to Colombia have grown rapidly over the last few years, and their economic significance is increasing apace. This article provides a detailed analysis of the economic and social effects of these currency flows and draws attention to the potential long-term risks involved. Accordingly, it analyses trends in remittances in Colombia over the last few years, paying special attention to their importance to the country’s economy and the socioeconomic characteristics of their senders and recipients. This analysis is followed by an assessment of remittances in Colombia which indicates that, while they may help to improve the situation of the country, they also entail a number of costs that may, in the long term, be detrimental to its economy.

This article explores some of the changes that Argentina’s agricultural sector has undergone in the past decade, before going on to analyse the structure of the production sector for a non-traditional crop, the blueberry, in the province of Entre Ríos. This crop is unusual in that it has been adopted chiefly by entrepreneurs from outside the local area and shows alternatives in terms of diversification of production and vertical integration. Capital investment is more important in blueberry production than investments of land, and information and management technologies play an important role. These are also features of the recent development of traditional crops in non-Pampas areas. The role of capital from outside the sector is worthy of consideration, given the flexibility and versatility made possible by some of today’s production methods.