CEPAL Review - Volume 2007, Issue 91, 2007

The volatility of economic growth in the countries of Latin America and the Caribbean has been exacerbated by a lack of suitable instruments for smoothing external shocks. Difficulties with the provision of emergency financing and the development of financial markets capable of trading government securities that incorporate better contingency mechanisms have contributed to economic volatility. To identify routes towards progress with these two issues in the Latin American context, the present article examines the role that could be played by regional and subregional financial institutions, always bearing in mind that while these can supplement global institutions, they cannot supplant them.

Although the states and municipalities that comprise the Brazilian Federation have considerable autonomy in raising their own tax income and spending public funds, this is not the outcome of a planned decentralization process. The improvement in fiscal indicators at the subnational-government level since the promulgation of the Fiscal Responsibility Act has made a major contribution to the success of the country’s macroeconomic stabilization policy. Nonetheless, the Federation is seen as a major stumbling block for reform of the tax system. As a contribution to the debate on federative balance in the division of fiscal responsibilities, this paper makes a diagnostic study of the federative framework and recent institutional changes, and proposes a new federative agenda.

This article undertakes a critical examination of the usefulness of fiscal responsibility laws in situations of institutional weakness. It analyses the case of Argentina, where prodigal use of fiscal rules (two different laws in just five years) contrasts with their limited effectiveness for fiscal policy sustainability and transparency, and it confirms that in situations of institutional weakness a fiscal responsibility law is unlikely to constrain government decision-making to the extent necessary to correct the behaviour of the public finances. The case of Argentina thus provides a warning for supporters of fiscal rules. When fiscal credibility is low and institutions weak, not only may such rules be fiscally ineffective, but non-enforcement may weaken yet further the fragile institutional context which made them so ineffective to begin with.

The Computable General Equilibrium model, based on the Global Trade Analysis Project (GTAP) model, is used to evaluate the impact of separate bilateral free trade agreements by Colombia, Ecuador and Peru with the United States of America (USA). As the Andean Trade Promotion and Drug Eradication Act (ATPDEA) is to expire shortly, a number of different scenarios have been analyzed: full liberalization, liberalization excluding sensitive products and non-conclusion of agreements. Signature of the agreements would lead to a widespread increase in trade among the negotiating countries to the detriment of their Andean partners. While the effects on welfare would benefit only the United States and Peru, from the capital accumulation standpoint they are clearly positive for all countries. Research shows that, while these agreements would not be enough on their own to trigger a process of sustained development, an active economic and social policy could usefully tap their potential

In this paper we argue that Argentina, Brazil and Mexico must focus economic and social policies on creating employment if they want to provide decent work (i.e. formal jobs with social security coverage). During the 1990s, financial and trade liberalization and the associated laissez-faire policies did not deliver in terms of growth or employment in the countries under consideration. We assess the macroeconomic, trade, investment and labour-market policies of the countries during 1990-2004 and then propose a series of recommendations that give employment growth the priority it deserves.

This conceptual and historical analysis of paradigmatic social policy experiences in the region reveals some fundamental landmarks in the evolution of the link between selective anti-poverty policies and social sector policies. These landmarks are associated with major changes in targeting policies and with a number of universal social policy reforms. Special attention is given to the redistribution-with-growth approach; subsequent reductionist targeting proposals, which have undergone shifts in conceptual and effective terms over the last two decades; and the concern for interaction with social sectors displayed by some present-day conditional transfer programmes, which stand out in the region because of their scale. Two related trends observed in fields that go beyond the effort to combat poverty are also analysed: the reductionist social risk management proposal and, in the opposite direction, the introduction of health guarantees.

This study analyses the effects of residential segregation in Montevideo on the learning differences of students and examines the efficacy of the educational system’s responses seeking to deal with the inequities generated by those processes. After describing the effects of the family, the school and the neighbourhood on learning, it presents hierarchical linear models which seek to isolate the effects of each of these contexts. It summarizes the challenges raised by the results to Uruguayan education’s efforts to dissociate learning achievements from social origin and examines the responses of the authorities of the sector to those challenges. Finally, it reviews policy options for strengthening the role of education as the principal means for integrating new generations in the light of new problems in relation to urban segregation.

This article identifies areas of agreement and disagreement among Mexican economists in relation to key issues of economics, on the basis of a survey of 360 members of the profession. The propositions eliciting the greatest consensus included: equity in income distribution, vigorous use of antitrust and consumer protection laws and the use of countercyclical fiscal policies. The most contentious issues were: private investment in the energy sector, the determinants of inflation, the minimum wage as a cause of unemployment and the objectives to be pursued by an independent central bank.

This study examines institutional changes in Chile and Uruguay between the mid-1960s and late 1990s. It seeks to tie together the macro and micro levels in order to observe how institutions working with local and global issues interact or conflict from the perspective of two industrialists’ associations, the Manufacturers Association (SFF) in Chile and the Chamber of Industry of Uruguay (CIU). From this vantage point, the study analyses how the organizations’ ‘logic of appropriateness’ has altered since the 1960s, with the expectation of identifying changes in the way sources of legitimacy interact at the global, regional and national levels. To make the process of change more visible, the study concentrates on two years, 1966 and 1998. It also tries to identify new dimensions of comparison between the development processes of Chile and Uruguay.