Spain's grim future

Martin Wolf rightly forecast difficult times for Spain. Is the country prepare for it? Can developing countries, particularly from Latin America, learn from its experience? We can expect four or five years of very low growth, but institutions, political parties and citizens do not seem to accept it.

Walmart´s new sourcing strategy: what impact on developing countries?

According to the FT, Walmart just announced that it aims to manage its supply chain on a global basis:

"Walmart is launching a drive this year to cut billions of dollars of costs from its supply chain by combining its store purchasing across national frontiers in a new stage in the globalisation of its business.

The effort is part of plans by the world’s largest retailer to increase the proportion of goods that it buys directly from manufacturers, rather than through third-party procurement companies or suppliers."

This could contribute to further alter the opportunities for many developing countries as Walmart increases its bargaining power over domestic suppliers all around the world. At the end, then, the crisis may accelerate the concentration of lead firms in many sectors and further reduce value added in Central America and other regions of the developing world.

The flexibilization of college education

In the last few days, I have been talking with friends about the state of college education in Spain. In recent years setting the foot in the professorship ladder has become increasingly difficult as new low-paying and insecure contracts (like "profesor asociado") have become more popular. The crisis is likely to accelerate this trend and reduce the amount of young people that have stable, long term contracts that allow them to build their career as researchers. What is most surprising is that the situation is not so dissimilar in countries with more advanced university systems. The NYT, for example, reports today that "n 1960, 75 percent of college instructors were full-time tenured or tenure-track professors; today only 27 percent are. The rest are graduate students or adjunct and contingent faculty". The end result may be less research, worse employment conditions for academics and less stability in education outcomes.

Health care reform and the particularities of the US

The US just took one more step towards reforming its health care system. The reform incorporates a set of regulations, taxes and subsidies to control health prices and increase the number of uninsured. Yet it does not incorporate a "public option"--a government-run insurance to compete with private ones. A few reflections on the reform and its implications for policy debates in other parts of the world:

a. I agree with those that claim that the reform should pass. Yet the loss of the public option is much more significant than many recognize (and justifies why liberals are disappointed). A strong public option would have opened the door for a government-run system in the long run and would have intensified pressures on private insurance. This is now missing.

b. Economic and social reforms are path dependent--something to remember when one things about Latin America and other parts of the world. It is simply difficult to move from a private-dominated system to a public one... or the other way around. The reform is one more reminder that there are many paths towards economic development, even if some of them will be better for equity than others.

c. Will this reform shift the debate on social policy in other parts of the world? I am less optimistic than a few months ago. A system of subsidies and taxes that do not incorporate a public option is quite compatible with the current, weak post-Washington Consensus (or Neoliberalism plus). At the end, this is an important reform for the US but one that may have relatively few implications in other countries.

Divided right wing ARENA in El Salvador

Losing elections after more than ten years in power is never easy, something is now becoming evident in the case of El Salvador. As El Pais reports, President Sacca has been expelled from the party and his followers have founded a new one. This would be good news for the current government and for voters if it creates a moderate right-wing party that is able to negotiate with FNLM.

Back after a while

I am back after a while without writing posts and with much more commitment to write often... even if I am not sure how many students and others are reading this blog. Two links that may be of interest:

a. The Economic Commission of Latin America just published its annual survey of economic conditions in the region (Preliminary Overview of the Economies of Latin America and the Caribbean). ECLAC expects a growth of 4.1% in 2010 for the region as a whole, with Brazil (5.5%), Uruguay (5%) and Peru (5%) doing particularly well. I think these numbers are too optimistic because the US and Europe may actually suffer more than it is currently expected.

b. A recent documentary (The End of Poverty?) offers a much needed critical approach to the challenges of poverty in the world. I have not seen it yet, but it looks promising.

The mainstream reading of the 1980s

I just came across an interesting short documentary on Bolivia and shock therapy. It is very well done, but it is very surprising to hear once again the Neoliberal reading of the crisis and the reform. With hindsight, it really resulted in unconvincing policies and a quite incomplete economic counter-revolution.