Sunday, July 8, 2018

Lessons from La Paz

I am glad to come back to the blog after more than a year without writing.  Latin America is in a rather interesting and contradictory moment (e.g. Mexico elects the first leftist candidate in decades while Colombia opts for an Uribista) so it is a great opportunity to write again.  I am also beginning a sabbatical at the Kellogg Institute in Notre Dame soon and will try to write about the region and about my research projects more often.

I had the opportunity to spend last seven days in La Paz, a unique city in Latin America.  As part of the CAF-LAC final agreement (which is finishing in its currently incarnation after six successful years), we organised a conference with the Universidad Católica San Pablo on Social and Economic Development in the Andean countries.

I could reflect on many components issues discussed during the last few days, but let me emphasise two that may require further research:

a. The political economy of structural change in mining/oil economies.  In conversations with John Crabtree, we agreed that finding the right time to promote structural change (for example, through active industrial policies) is rather complicated.  Commodity booms are periods of Dutch disease: rents are high, the exchange rate strong and it is just easier to benefit from mining exports and cheap imports.  There are just not enough political incentives to promote new sectors of the economy (including through a weaker exchange rate).  These are often periods of active state intervention... but not active industrial policy (at least this has been the case in most of Latin America during the 2000s).  In contrast, period of crises (which often take place after commodity booms) lead to the adoption of neoliberal policies and the reduction of state intervention.

Do you know of any cases within Latin America or beyond of active industrial policies in commodity exporters?

b. There is an intense debate in Bolivia about the macroeconomic sustainability of current policies.  Is the government truly committed to stability?  Will it continue reducing reserves at the current (high) speed)?  Will it maintain its high public deficit?  Answering these questions is not only about economics but about politics and about policy learning.   We need to understand the extent to which the current government has LEARNT the dangers of deviating from macroeconomic rigour.  Everyone recognises that the government  was rather careful in recent years--partly because it still remember the hyperinflation of the 1980s.  But, if this is the case, won't it remember those lessons in the near future?  Shouldn't policy learning result in a more careful policy stand after the elections next year?

In discussing these questions with a few friends like Jose Peres Cajías, I realised that we may not have enough research on policy learning and its implications on macroeconomic policy both in good and bad times.

Wednesday, January 18, 2017

In thinking about the Economics of Latin America

Today I start this year´s course on the Economics of Latin America at the Latin American Centre.  In preparing the first class, I realised an obvious point: how much the region has changed during the last two decades that I have been studying it but also how much continuity there is.  We had ten years of growth in which we were all wondering how much the region had truly become different... and now we are back to a crisis.  Finding better ways to understand both continuities and changes should be one of the primary goals of political economy in the region.

Sunday, November 20, 2016

Trump´s impact in Latin America

I have not written much in this blog lately... partly because of the depression regarding Trump´s victory.   Things are going to be rather bleak from now on.

Meanwhile, here is my column in El Periodico on the likely impact of Trump in Latin America (in Spanish).  We have no idea who will be his main advisors in the region so it is all speculation... but there is no doubt that new problems may emerge and some countries should be quite worried.  Comments most welcome!

Wednesday, October 5, 2016

Tuesday, September 20, 2016

Discount for our new book

As I have written in this blog in the past, my friend Juliana Martínez Franzoni and I have just finished a book on how to build universal social policy in the South.  I hope to write a longer summary/discussion of the book here soon, but now I would like to encourage all of you to buy it or order it for the library.  You can get a 20% discount here.

Here the abstract:

Universal social policies have the power to reduce inequality and create more cohesive societies. How can countries in the South deliver universalism? This book answers this question through a comparative analysis of Costa Rica, Mauritius, South Korea, and Uruguay, and a detailed historical account of Costa Rica's successful trajectory. Against the backdrop of democracy and progressive parties, the authors place at center stage the policy architectures defined as the combination of instruments that dictate the benefits available to people. The volume also explores the role of state actors in building pro-universal architectures. This book will interest advanced students and scholars of human development and public and social policies, as well as policymakers eager to promote universal policies across the South. 

Hard to believe: evolution of income at the top

I am trying to write an article summarising the recent evolution of income inequality in Latin America.  The reduction in all countries but Honduras is well known, but some numbers are just hard to believe.  This is the reduction experienced by top incomes during the period 2001-2012.  The share decreased in almost all countries and in several by more than 20%.  This is hard to reconcile with the evolution of political economy and also with the limited data we have based on tax receipts.

Percentage change in the income share of the top decile, 2001-2012

Source: own calculations with data from SCEDLAS

Thursday, September 1, 2016

A review of the links between the commodity boom and inequality in Latin America

Thanks to the kind invitation from Carmen Díaz Roldán to give a lecture at the Jornadas de Economía Internacional, I had the opportunity to reflect on why Latin America used the latest commodity boom better than in the past to reduce income inequality.  The expansion of unskilled jobs together seems to be at the heart of the region´s success...but also relatively unexplained.  Here the presentation in English and here in Spanish.  I hope to write a paper on it soon, so comments welcome!