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Latin America faces important development challenges. Although many countries in the region have implemented solid macroeconomic and financial policies, large segments of the population have not reaped the benefits from higher economic growth. Based on the analysis of CGD’s substantial in-house expertise in the region, the initiative’s goal is to advance recommendations to policymakers in Latin America as well as those in developed countries and multilateral organizations to support the region’s efforts to climb the development ladder and reach shared prosperity.
Latinoamérica enfrenta importantes desafíos para su desarrollo. Aunque muchos países han implementado sólidas políticas macroeconómicas y financieras, grandes segmentos de la población no han aprovechado los beneficios de un mayor crecimiento económico. Basada en la sustancial experticia de CGD en la región, el propósito de la Iniciativa es presentar recomendaciones para guiar a los diseñadores de políticas públicas en Latinoamérica, así como a los países desarrollados y organizaciones multilaterales para que apoyen los esfuerzos de la región hacia la industrialización y la prosperidad común.
Aunque Latinoamérica comparte muchos elementos en común con el resto de los países en desarrollo, y a pesar de las diferencias entre cada país, existen tres elementos que caracterizan a la mayoría de los países de la región: Latinoamérica es la región financieramente más abierta (es decir, la que impone menos restricciones a la movilización internacional de capitales), la más democrática y la más desigual entre todas las regiones en desarrollo del mundo.
Estas características se combinan entre sí para generar un importante desafío al desarrollo regional. Las sólidas políticas macroeconómicas y financieras aplicadas en la mayoría de la región contribuyeron a generar altas tasas de crecimiento desde mediados de la década del 2000, y a resistir la crisis financiera global de 2008 de manera extraordinaria. Sin embargo, queda una parte de la población que no se ha beneficiado significativamente de este crecimiento: servicios sociales inadecuados y, en algunos países, altas tasas de pobreza, han persistido en el tiempo. Así mismo las deficiencias a nivel institucional, creciente violencia y rezagos en materia de productividad, problemas en muchos casos influenciados por políticas de los Estados Unidos, alimentan el descontento popular y representan una amenaza para el crecimiento sostenido de la región.
Liderada por la investigadora principal Liliana Rojas-Suarez, la Iniciativa para América Latina busca analizar la experiencia latinoamericana y ofrecer lecciones, tanto para los países desarrollados y subdesarrollados, como para los organismos reguladores:
¿Qué pueden aprender los países desarrollados de la vasta experiencia de Latinoamérica en materia de prevención y gestión de crisis financieras?
¿De qué manera puede ser utilizada la experiencia de Latinoamérica por los organismos multilaterales para diseñar recomendaciones para la estabilidad financiera?
¿Qué pueden aprender, de las fortalezas y debilidades de Latinoamérica, los demás países en desarrollo que buscan crecer en un contexto de mayor integración financiera?
¿Cómo puede utilizarse la experiencia de los países de alto ingreso para apoyar los esfuerzos de Latinoamérica por salir de la llamada trampa del ingreso medio (en la cual Brasil, la economía más grande de la región, ha estado atrapada por más de dos décadas)?
¿Cómo pueden los Estados Unidos hacer mejor seguimiento a la asistencia para el desarrollo enviada a Latinoamérica, en especial a Haití, mientras se mantienen los esfuerzos de recuperación?
¿Qué pueden hacer los Estados Unidos para enfrentar los desafíos políticos y económicos más importantes que enfrentan México y otras naciones latinoamericanas?
Gracias a su amplia experiencia e investigación en temas regionales, CGD está favorablemente posicionado para abordar algunas de estas interrogantes. CGD ha publicado dos libros sobre Latinoamérica, así como una gran cantidad de documentos de trabajo, reportes y notas de políticas públicas que discuten los temas regionales clave. CGD también organiza y es anfitrión de la mayoría de las reuniones del Comité Latino Americano de Asuntos Financieros (CLAAF), compuesto principalmente por ex-gobernadores de bancos centrales y ex-ministros de finanzas de toda la región.
Reforming inefficient and inequitable energy subsidies continues to be an important priority for policymakers as does instituting “green taxes” to reduce carbon emissions. The paper outlines how the use of digital technology can help accomplishing those reforms, drawing on four country cases. The technology is only a mechanism; it does not, in itself, create the political drive and constituency to push reform forward.
Center for Global Development
WASHINGTON (July 2, 2019) -- The Latin American Committee on Macroeconomic and Financial Issues (CLAAF by its Spanish acronym) met in Washington today to discuss ‘Mexico’s financial risks: Solving Pemex for a Solvent Mexico.’ The CLAAF explored some of the major macroeconomic issues facing President Andrés Manuel López Obrador (AMLO), the new leader of Mexico, such as declining per-capita income growth, fiscal and monetary issues, and the country’s finance and trade integration with the US and larger international system, and made a series of related reform recommendations in a policy statement.
The CLAAF is a group of prominent economists and academics who have served as government ministers, central bank governors, and/or senior officials at multilateral institutions like the Inter-American Development Bank, International Monetary Fund and the World Bank. Twice a year, the group convenes to analyze major national or regional macroeconomic issues and then release a series of policy recommendations to change course and advance greater economic and financial stabilization.
Cognizant of and analyzing some of the major domestic and international pressures on the AMLO administration (such as NAFTA legacy and the manufacturing sector, the new USMCA, US Federal Reserve activity, rule of law and corruption issues, and more) the CLAAF centers in on Pemex, the state-owned oil company, “by far the single most important fiscal problem faced by the AMLO administration. Lack of investments in exploration and extraction have led to a steady reduction in oil production, while the company has issued a large stock of debt in international markets. Investors have become increasingly weary of holding Pemex bonds,” the group states.
To avoid a sovereign rating downgrade or an additional deterioration of Pemex, either of which could severely curtail capital inflows to Mexico, and improve the country’s economic outlook, the CLAAF believes that:
the paramount task for the government is to address the critical situation at Pemex:
a corporate restructuring of Pemex is required, and should be complemented by a number of additional actions, including attracting new private funding for investments in exploration and extraction;
a comprehensive corporate restructuring plan can also help avert Pemex’s debt crisis. Currently, Pemex is on a collision course that may lead to a debt restructuring; and
while rationalization of current expenditures is needed, the success of the government’s plan of using primary surpluses to finance public expenditure projects requires well-developed and substantive feasibility studies.
“The first priority for the Mexican government should be the prompt resolution of Pemex’s deep financial problems,” said Liliana Rojas-Suarez, president of the CLAAF and director of the Latin American Initiative at the Center for Global Development. “If this issue is not addressed in time, a downgrade of Mexico´s sovereign debt is likely. This, combined with the current external challenges arising mainly from US policies, could further curtail Mexico’s economic growth prospects and performance.”
CLAAF members participating in the June-July 2019 session:
Laura Alfaro, Warren Albert Professor, Harvard Business School, Former Minister of National Planning and Economic Policy, Costa Rica
Augusto De La Torre, Former Chief Economist for Latin America and the Caribbean, The World Bank. Former Governor, Central Bank of Ecuador.
Guillermo Calvo, Professor, University of Columbia; former Chief Economist, Inter-American Development Bank
Roque Fernandez, Economics Professor, UCEMA University; former Minister of Finance, Argentina
Pablo Guidotti, Professor of the Government School, University of Torcuato di Tella; former Vice minister of Economy, Argentina
Paulo Leme, Executive in Residence Professor of Finance, Miami Business School, University of Miami.
Enrique Mendoza, Presidential Professor of Economics, University of Pennsylvania. Director, Penn Institute for Economic Research.
Guillermo Perry, Non-Resident Fellow, Center for Global Development. Former Chief Economist of the Latin America and Caribbean Region, World Bank
Carmen Reinhart, Minos A. Zombanakis Professor of the International Financial System at the Harvard Kennedy School.
Liliana Rojas-Suarez, president, CLAAF; Senior Fellow and Director of the Latin American Initiative, Center for Global Development; former Chief Economist for Latin America, Deutsche Bank
Full Statement Here
Video of Findings and Discussion Here
Over the last 25 years, Mexico has benefited from robust trade and financial integration with North America and strong domestic macroeconomic and financial stability, although much remains to be done on the socioeconomic front.
Against this backdrop, the economy is currently facing strong domestic and external headwinds. At home, the economy has slowed since last year, with real GDP contracting 0.2% in 1Q2019, reflecting low productivity in Mexico and softer growth in the United States. President Andrés Manuel López Obrador (AMLO) has announced protectionist policies, which are not supportive of private investment. From the external side, the lingering uncertainties about Trump’s tariffs on Mexico's imports could have a major negative impact.
How should Mexico deal with these challenges? The Latin American Committee on Macroeconomic and Financial Issues (CLAAF) will discuss central questions on a) the best policy responses to market uncertainties, b) the best way to deal with the immigration flood, which is playing a key role in Trump's new tariff threats, c) what Mexico’s policymakers can learn from the recent experiences in Argentina and Brazil, and d) the most pressing reforms needed to restore investors’ confidence and Mexico's economic growth.
A light breakfast and coffee will be available at 9:30 a.m.
In this new book, Bill Cline, a joint senior fellow at CGD and the Peterson Institute for International Economics, provides the first ever estimates of the impact on agriculture by country, with a particular focus on the social and economic implications in China, India, Brazil, and the poor countries of the tropical belt in Africa and Latin America. His study shows that the long-term negative effects on world agriculture will be severe, and that developing countries will suffer first and worst.
Using data collected by the North Carolina Growers’ Association (NCGA), the leading employer of workers with H-2 visas, Michael Clemens shows that foreign workers have almost no direct effect on the employment prospects of US workers in H-2 occupations. Instead, they actually a large and positive indirect effect on US employment by contributing to North Carolina’s economy.
Last week the World Bank's Chief Economist, Paul Romer, told the Wall Street Journal the Bank had manipulated its own competitiveness rankings to undermine Chile's socialist government, and hinted Chile might not be alone—then he retracted the claim. Romer's conspiracy theories probably aren't credible, but neither are the Doing Business numbers.
One feature of adjustment loans that has been often overlooked in their evaluation is their frequent repetition to the same country, with such extremes as the 30 IMF and World Bank adjustment loans to Argentina over 1980-99 or the 26 adjustment loans to Cote d'Ivoire and Ghana. Repetition changes the nature of the selection problem, with the possible implication that new loans had to be given because earlier loans were not effective. This study finds that while there were relative successes and failures, none of the top 20 recipients of adjustment lending over 1980-99 were able to achieve reasonable growth and contain all policy distortions. The findings of this paper are in line with the foreign aid literature that shows that aid does not discriminate between good and bad policies. There's a big difference between structural adjustment lending and structural adjustment policies.
Recognizing the growing global premium on environmental sustainability in a climate-challenged world, we call on member governments of the World Bank to take the first step in that direction by renaming the International Bank for Reconstruction and Development (IBRD) as the International Bank for Reconstruction and Sustainable Development (IBRSD)—and to reshape its mission accordingly, toward leadership on issues of the global commons or global public goods that are squarely in the development domain and require a global shareholder base to respond collectively. Shareholders should in turn look to the regional MDBs to take leadership in supporting the new imperative of sustainable development through country and regional operations across all sectors, but particularly in increasing investment in infrastructure that takes into account the logic of low-carbon and climateresilient economies in the developing world. In line with this approach to differentiated roles within an MDB system, the panel makes five recommendations to better realize the MDB system’s potential for meeting today’s development challenges.
My goal is to get students to think critically about development theory and practice. A slight majority of examples and readings will be drawn from sub-Saharan Africa, in part give the course some focus, and in part because it is my area of expertise. But in I will also bring in a considerable amount of material on Latin America, the early development of the US and Europe, and to a lesser extent Asia—an order determined largely by my knowledge or ignorance.