CEPAL Review - Volume 2011, Issue 105, 2011

This article analyses the relationship between energy consumption in industry and industrial productivity and the implications of this for sustainable development. To this end, it presents a matrix characterizing economies as: (i) converging or diverging in terms of energy consumption per unit of value added, and (ii) catching up with or falling further behind the productivity level of the international frontier (the United States). On the basis of data from the industrial surveys of four Latin American countries (Brazil, Chile, Colombia and Mexico), it concludes that the region’s evident specialization in natural resource-intensive sectors has contributed to a pattern of high energy consumption and slow productivity growth, and that while there is no productive convergence, there is evidence of energy sustainability in three of the four countries analysed.

Three empirical regularities have been identified in the financial literature: bank credit markets operate with collateral, they operate with excess demand and they coexist with other forms of credit provision. In the particular case of less developed countries, the financial structure comprises the banking industry, the formal non-banking industry and the informal sector. This paper presents a theoretical model that explains all three regularities together. According to the model, wealth inequality in society is the essential factor that explains this dual-dual financial structure. The model predicts market segmentation: the wealthy and the banks constitute one market, the less wealthy and formal non-banking organizations constitute another and the poorest groups and small lenders constitute the informal sector; moreover, credit is more expensive in the latter sectors. As long as wealth inequality remains unchanged, this financial structure will prevail. The public policy implications of the model are also presented.

Conventional labour economics argues that the typical firm is a wage taker and that wages are determined by the interaction of labour supply and the aggregate demand for labour. Under these conditions, markets clear, and non-frictional unemployment cannot feature in the long run. The persistently high levels of unemployment in the Caribbean present a significant challenge to this critical prediction of neoclassical economics. Efficiency wage theories argue that wages are endogenously determined by firms, which pick wage levels that minimize the average per unit cost of “efficiency labour”. Among the important conclusions of these theories is the possibility of persistent non-frictional unemployment. This paper presents evidence suggesting the existence of long-term inter-industry wage differentials in Trinidad and Tobago. This is a possible indication of the applicability of efficiency wage theories in explaining labour market phenomena in the twin-island Republic.

This paper uses dynamic panel techniques to evaluate the extent to which Mexico’s consumer price index will be affected by food price inflation in the long term. We argue that sharp increases in international food prices (of the type seen since 2001) are likely to persist and to reinforce domestic growth constraints in Mexico. Our results suggest that in an economy like Mexico’s that is highly dependent on imported food, the consumer price index will be noticeably affected by international food price increases. Conducting monetary policy without reference to the structural issue of food price inflation is therefore likely to be ineffective in controlling inflation and could be damaging in terms of its impact on demand and growth. Thus, the revitalization of the Mexican agricultural sector should be a centrepiece of future counter-inflationary policy.

Chilean exports have boomed since 1975, growing at an average annual rate of 6% per year in real terms. In this paper, we use Chilean manufacturing data at the plant level for the years from 1990 to 2007 to investigate the relationship between exports, plant dynamics and productivity. Our findings are consistent with the predictions of the new theories of heterogeneous firms and trade. First, 64.4% of the total increase in exports is accounted for by new exporters net of failed exporters. This effect is a combination of a larger proportion of plants exporting, a rising proportion of output sold abroad and a higher level of total sales. Second, productivity and exports co-moved over the course of the Chilean boom, exports being positively correlated with both withinplant productivity growth and the productivity-enhancing reallocation of output between plants.

About one third of all Chileans take early retirement. As retirement age approaches, people become more aware of the health issues associated with that stage of life. This reduces their uncertainty about their future quality of life and may lead to a relative increase in impatience. This article offers a theoretical examination of how future life expectancy affects relative levels of impatience in ways that may increase the probability of early retirement. The empirical findings for Chile show that the greater people’s future life expectancy is, the less likely they will be to take early retirement. The article also looks at how risk aversion increases relative impatience as a consequence of people’s uncertainty as to whether or not they will enjoy a good quality of life in the years ahead. The empirical findings point to a positive correlation between risk aversion and early retirement via the mechanism of life expectancy.

This paper develops a model and explains the determinants of profit margins in the Peruvian business sector in the 1998-2008 period. These are established in a fixed-price scenario, with reference to a set of variables such as the price elasticity of demand, the behaviour of possible industry entrants and any regulatory intervention by government. In addition, there is a direct relationship between profit margins and self-financing of investment. Profit margins and profit ratios in the business sector are rising and exceed international norms. The paper also identifies a trend towards lower levels of debt and leverage. It does not reject the hypothesis of linkage between profit margins and investment at the aggregate and sectoral level. The output-to-capital ratio or sales-to-assets ratio is directly linked to profit margins. Most investment is self-financed.

The objective of this study is to analyse the determinants of the quality of education in Argentina and, in particular, to look at what influence a school’s ownership structure has. A multilevel regression model and 2006 data from the Programme for International Student Assessment (pisa) were used for this purpose. One of the main findings is that the correlation between a school’s administrative structure (public or private) and its students’ scholastic performance fades when the socioeconomic school environment is taken into consideration.

Brazil was characterized by a rapid process of trade liberalization in the 1990s, resulting in a dramatic increase in the volumes of exports and imports since the year 2000. Over the same period, the relative demand for skilled labour has increased substantially. To investigate whether these two simultaneous phenomena are linked is the purpose of this paper. More particularly, this study focuses on the possible impact of domestic technology, capital complementarity and trade openness on the relative demand for skilled labour in Brazilian manufacturing firms, using a unique panel database of Brazilian manufacturing firms over the period from 1997 to 2005. The empirical evidence supports the hypothesis that technology played a role in determining the skill upgrading of Brazilian manufacturing firms. Indeed, the estimations show that domestic technology and capital formation are complements for skilled workers and that imported capital goods clearly act as a skill-enhancing component of trade.

This article argues that differences in gdp growth rates are related to differences in income-elasticities; and that these, in turn, depend on the technological intensity of domestic production. Statistical tests were conducted to verify this hypothesis; and the following hypothetical elasticities were estimated to demonstrate its validity for the Brazilian economy: (i) basic; (ii) expanded with capital flows; and (iii) implicit. Co-integration techniques were used in conjunction with vector error correction, to estimate real elasticities for each technological category of output in the Brazilian trade matrix. The results obtained were corroborated by analysing impulse-response functions and the decomposition of the forecast error variance, which confirmed that goods of higher technological intensity have higher income-elasticities. Thus, according to Thirlwall’s Law, increasing the domestic production of such goods should promote growth.