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Transcript of 1 Latin Americas Development Challenges Lessons from the OECD Latin American Economic Outlook Jeff...
1
Latin America’s Development Challenges
Lessons from the OECD Latin American Economic Outlook
www.oecd.org/dev/leo
Jeff Dayton-JohnsonSenior Economist and Head of the Latin America and Caribbean Desk
OECD Development Centre
Bertelsmann StiftungBerlin, 5 June 2008
2
• Latin American market democracies matter for the OECD and its member countries
• The Latin American dimension at the OECD: Mexico: Member since 1994; Chile: candidate since May 2007; Brazil:
enhanced cooperation since May 2007 Economic Surveys:
Latin American Economic Outlook 2008
1992, 1995, 1997, 1998, 19992000, 2002, 2003, 2005, 2007
2003, 2005, 2007
2000, 2005, 2006
OECD & Latin AmericaOECD & Latin America A growing commitment
3
• Membership of the Development CentreWith a Governing Board open to OECD non-member countries, the Development Centre provides a framework for dialogue and experience sharing with emerging regions all over the world.
• Four* Latin American countries are members of the Centre:– Mexico – Chile– Brazil– Colombia
Development CentreDevelopment Centre Bridging OECD & emerging economies
4Source: OECD Development Centre, 2007. Based on IMF , Globalization and Inequality, 2007. OECD* includes: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Korea, Netherlands, Norway, Singapore, Spain,
Sweden, UK, US.
0
5
10
15
20
25
-101234567
Q1 Q2 Q3 Q4 Q5
Latin America
1993 2003 change
GD
P p
er ca
pita
b
y qu
intile
GD
P p
er ca
pita
b
y qu
intile
GD
P p
er ca
pita
b
y qu
intile
GD
P p
er ca
pita
b
y qu
intile
Qu
intil
e a
nn
ua
l gro
wth
in
GD
P p
er
cap
itaQ
uin
tile
an
nu
al g
row
th
in G
DP
pe
r ca
pita
Qu
intil
e a
nn
ua
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wth
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GD
P p
er
cap
itaQ
uin
tile
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DP
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r ca
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The ContextThe Context Slower growth, not shared with the poor
5Source: Latinobarómetro (2007), Bertelsmann Transformation Index (2007)
The ContextThe Context Democratic consolidation
6
11 Pension Reform: What Benefits?Pension Reform: What Benefits?
44 Fiscal Policy: A Critical Tool for DevelopmentFiscal Policy: A Critical Tool for Development
Telecommunications and DevelopmentTelecommunications and Development22
33 China and India: Threats and OpportunitiesChina and India: Threats and Opportunities
7
Source: OECD Development Centre (2007), based on World Bank Development Indicators.
Pension ReformPension Reform A mixed impact on national savings
8
Pension Fund Assets as percentage of GDP, 2006
Source: OECD Development Centre (2007), based on Global Pension Statistics database.
Pension ReformPension Reform Development /deepening of financial markets
9
11 Pension Reform: What Benefits?Pension Reform: What Benefits?
44 Fiscal Policy: A Critical Tool for DevelopmentFiscal Policy: A Critical Tool for Development
Telecommunications and DevelopmentTelecommunications and Development22
33 China and India: Threats and OpportunitiesChina and India: Threats and Opportunities
10
56%24%
7%
6%4% 3%
FDI in telecommunications, by region
Latin America and Caribbean
Central and Eastern Europe
South East Asia
South Asia
Middle East and Northern Africa
Sub-Saharan Africa
Source: OECD Development Centre, based on PPI Database, World Bank Source: Information and Communications for Development 2006, World Bank
TelecomsTelecoms Latin America leads developing world in telecoms FDI
11
Investment in telecommunications has
Source: OECD Development Centre, based on SEDLAC (2007) and IADB (2007) data.
The number of telephone lines has increased by a factor of 10 in Latin America, in part because of foreign investment
TelecomsTelecoms FDI-led increase in connectivity
12Source: OECD Development Centre, based on SEDLAC surveys.
Inequality is high: a quarter of poor households have a telephone at home, 3 times less than high-income households
TelecomsTelecoms Unequal distribution of benefits
13
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
Colombia
Bolivia
Brazil
Argentina
Chile
Guatemala
Mexico
Peru
Paraguay
Uruguay
Nicaragua
Costa Rica
Index (Herfindahl-Hirschman) of concentration on the telephone marketTelephone lines, by segment
Fixed
Mobile
Source: OECD Development Centre, based on companies’ data.Monopoly
Perfect competition
TelecomsTelecoms Limited contestability of markets
14
11 Pension Reform: What Benefits?Pension Reform: What Benefits?
44 Fiscal Policy: A Critical Tool for DevelopmentFiscal Policy: A Critical Tool for Development
Telecommunications and DevelopmentTelecommunications and Development22
33 China and India: Threats and OpportunitiesChina and India: Threats and Opportunities
15
::SourceSource C.HJ.Kwan, Nomura Institute of Capital Markets Research C.HJ.Kwan, Nomura Institute of Capital Markets Research
Source: Source: OECD Development Centre, 2006OECD Development Centre, 2006
Based on Working Paper by Blázquez, Rodríguez and Santiso, 2006Based on Working Paper by Blázquez, Rodríguez and Santiso, 2006
*Value of exports to US from China in same product categories as country´s exports, as % of country´s total exports to US
*Arithmetic average of the following indexes: CC= and CS=
where ajt and ait equals the share of item “n” over total exports of countries j (China) and i in time t.
å --n
njt
nit aa
2
11
åå
å
n
njt
n
nit
n
njt
nit
aa
aa
22 )()(
% o
f exp
orts
% o
f exp
orts
Asian economies competition*
vs. Chinese exports to US, % , 2005
010203040506070
Thailand
Chine
se T
aipe
i
Indo
nesia
Malay
sia
Philipp
ines
Sout
h Ko
rea
Sing
apor
e
Japa
n
Latin American countries competition* vs. Chinese main export products, 2005
0%
10%
20%
30%
40%
50%
60%
Méx
ico
Brasil
Colom
bia
Argen
tina
Perú
Urugu
ayChi
le
Venez
uela
China/IndiaChina/India Opportunities for trade development
16Source: OECD Development Centre, based on WITS Database, 2007.
China/IndiaChina/India Strong demand for Latin American exports
17
Source: OECD Development Centre, 2007. Based on WITS and Comtrade data.
China/IndiaChina/India Excessive specialisation in commodities exports?
18
11 Pension Reform: What Benefits?Pension Reform: What Benefits?
44 Fiscal Policy: A Critical Tool for DevelopmentFiscal Policy: A Critical Tool for Development
Telecommunications and DevelopmentTelecommunications and Development22
33 China and India: Threats and OpportunitiesChina and India: Threats and Opportunities
19
Source: OECD Development Centre (2008), OECD (2007), Revenue Statistics 1965-2006 for OECD countries
Fiscal legitimacyFiscal legitimacy Revenues are low and structurally regressive
20
Government Revenues/GDP
Government Expenditures/GDP
Source: OECD Development Centre (2008)
Fiscal Fiscal legitimacylegitimacy Spending constrained by low revenues
21
Source: OECD Development Centre, 2007. Based on data by Goñi, López, and Servén (2006)
Gin
i coe
ffic
ient
Inequality before and after taxes and transfers
Po
ints
of
Gin
i ch
an
ge
(% c
ha
ng
e in
ine
qu
alit
y)
The effects of taxes and transfers
Fiscal legitimacyFiscal legitimacy Little redistribution through taxes and transfers
22Source: OECD Development Centre, 2007. Based on PISA (2003) and OECD Education at a Glance (2005)
Education Expenditures and Performance
Mexico
NorwayPolandSlovak Republic
Spain United States
Brazil
Indonesia
Thailand
Tunisia
Uruguay
300
350
400
450
500
550
600
- 5,000 10,000 15,000 20,000 25,000 30,000
Annual expenditure on educational institutions per student (2001) in equivalent US dollars converted using PPPs, by level of education, based on full-time equivalents
Mat
hem
atic
s S
core
(P
ISA
200
3)
Fiscal legitimacyFiscal legitimacy Quality as well as quantity
23Source: OECD Development Centre, 2007. Based on Latinobarómetro (2003).
Argentina
Bolivia Brazil
Chile
Colombia
Costa Rica
Ecuador
El Salvador
Guatemala
Honduras
Mexico
Nicaragua
Panama
ParaguayPeru
Uruguay
Venezuela
0
5
10
15
20
25
30
35
40
45
50
0 5 10 15 20 25 30
Fiscal legitimacy (% who trust taxes are well spent)
Dem
ocra
tic p
erf
orm
ance
(%
sat
isfie
d w
ith d
emoc
racy
)
Fiscal legitimacyFiscal legitimacy … is closely linked to democratic legitimacy
24Source: OECD Development Centre, 2007. Based on Latinobarómetro (2003, 2005) and ECLAC’s Panorama Social
Inequality (Gini coefficient 2000s)
Fis
cal l
eg
itim
acy
(%
tru
st t
axes
wel
l spe
nt)
Fiscal legitimacyFiscal legitimacy Closely linked to inequality
25
Fiscal legitimacyFiscal legitimacy The role of international capital markets
Brazil: recommendations(1:overweight, 0:neutral, -1:underweight)
-1.00
-0.50
0.00
0.50
1.00
J ul-97 J ul-98 J ul-99 J ul-00 J ul-01 J ul-02 J ul-03 J ul-04 J ul-05 J ul-06
Source:The authors from investment banks' publications, 2007
Presidential election date
Investment banks' recommendations during presidential elections(Window:-9 months before and +9 months after the election)
-0,5
-0,4
-0,3
-0,2
-0,1
0,0
0,1
0,2
0,3
0,4
0,5
-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9
Source: The authors based on investments banks' publications , 2008
before 2006 2006
Are international investors less spooked today by Latin American elections?
BRAZIL: Lula’s story Investment banks’ recommendations regarding sovereign debt surrounding
elections
26
• Fiscal policy, growth and development
• The quality of public spending: the case of education
• The structure of tax systems in Latin America
• Public debt and international capital markets
• Fiscal policy and the informal economy
LEO 2009LEO 2009 Fiscal Policy and Latin American Development
27
Latin American Economic Outlook 2008www.oecd.org/dev/leo
Vielen Dank!
Thank youMerciObrigadoGracias