Just a few weeks ago, Argentina nationalized its private pension system. This kind of action is not without precedent - Argentina froze bank deposits in 2001. The result? According to a paper from the World Bank on The Unfolding Crisis: Implications for Financial Systems and Their Oversight:...the freezing of deposits in Argentina in 2001 was one of the factors contributing to the poor deposit mobilization in the following years (as indicated by the declining ratio of bank deposits to GDP).The chart below shows Bank deposits as a % of GDP; the difference between Argentina and the average of middle-income countries is quite substantial. Good luck to any effort at rebuilding private pensions after the current financial crisis has passed! ...
Get ready for the next victim of the global credit crunch - microfinance. (Pascal Lamy's warning yesterday about a squeeze on trade finance is already old news in the quickly moving financial crisis.) For-profit microfinance institutions will find it harder and harder to find financing. MFIs will have to rely more heavily on donor support to continue their operations. It will be interesting to see how the contentious issue of commercialization plays out during the squeeze. And to top it all off, MFIs will have to decide whether to ration scare capital to fewer borrowers or charge higher rates (or some combination of both).
To find out more about how MFIs will deal with the credit crunch, there's no better place to turn than CGAP. They are putting on a three-day virtual conference...
The World Bank yesterday released its new Human Opportunity Index report. This first round focused on Latin America because of the extremes of inequality presented by the region; however, future rounds will be extended to other parts of the world. According to the press release:The study also finds that between one fourth (Colombia) and one half (Guatemala) of income inequality among Latin American adults is due to circumstances outside of their control, faced in the beginning of their lives. Race is a key factor to explain income differentials, especially for the most disadvantaged groups.As longitudinal data develops over the next few years, it will be interesting to see how inequality of opportunity and attitudes to the private sector relate. My guess? High levels of inequality will...
Transparency International hosted an interesting interview with the new president of Paraguay, Fernando Lugo. Transparency Watch: How do you plan to institutionalise the fight against corruption?
Fernando Lugo: First, as a basis, by auditing and establishing permanent controls by and within each of the government’s departments. Additionally, through the creation – which will be finalised at the appropriate time – of a National Anti-corruption Ministry, which will set the political and technical norms to elevate such a battle to the most institutionalised level possible. Perhaps they should take a page from Kenya's book and work on creating a system of e-government to help combat corruption. Although Paraguay has only 4.3 internet users per 100 people compared to Kenya's 7.6,...
Much of the lament following the latest failed talks of the Doha Round centered on liberalization of trade in agriculture. The hope, at least in part, was that a reduction in subsidies in the developed world could provide a stimulus to farmers in the developing world (never mind that the global rise in food prices would have been exacerbated in the short run by a reduction in subsidies). Coupled with the failed talks is a slowdown in the OECD economies, reducing overall demand for exports from the developing world. What's a developing country to do?Jamaica has an idea - an article in the most recent International Higher Education points out that the island country is trying to position itself as an exporter of educational services. Forget about trade in physical goods; the General...
from the IPS We haven't had many stories on how the food crisis has effected Latin America. A conference is happening now held that discusses how to cvope with the crisis, and how to help the poor thru it. "The countries have responded very well and very promptly, but obviously some are facing major difficulties, like nations in Central America that are not only net food importers, but oil importers as well," Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), told IPS.Bárcena avoided calling the present situation in Latin America and the Caribbean a "crisis", because ECLAC, a United Nations agency, estimates that the regional economy will grow by 4.7 percent in 2008 and by about four percent in 2009, thereby achieving seven...
Doing Business 2009 is here! The sixth in the World Bank Group's annual series on business regulations, DB 2009 allows us to take a look at five years of reforms since DB 2004. But before I get to that, let me hit the highlights of DB 2009:
This year's top reformer is...drum roll please...Azerbaijan! Azerbaijan improved on 7 out of 10 of the indicators tracked by DB and moved up 64 slots in the overall rankings.
Two regions - Eastern Europe and Central Asia and Sub-Saharan Africa - accounted for 7 of the top 10 reformers: Azerbaijan, Albania, Kyrgyz Republic, Belarus, Senegal, Burkina Faso, and Botswana. The other top 10 were Columbia, Egypt, and Dominican Republic.
Once again, Singapore tops the rankings, followed by New Zealand, the United States, and Hong Kong, China. ...
Economic gains have been seen in the Caribbean and Latin America. This is the sixth consecutive year the region has seen growth. This report says that growth could slow next year, due to inflation. - KaleThe Caribbean and Latin America have posted positive economic gains for a sixth consecutive year, despite the global economic downturn, a United Nations agency said last week.Regional gross domestic product (GDP) is growing at a rate of about five per cent, according to the latest Economic Commission for Latin America and the Caribbean (ECLAC) report.The report also said while economic growth for 2008 is unlikely to match the nearly six per cent expansion recorded last year, GDP per capita is forecast to grow three per cent in the region, for a fifth consecutive year, marking the...
I've just run across two papers examining the impact of remittances on growth, and they both point to a similar conclusion. The first, entitled Remittances and Growth in Latin America, concludes:Another interesting result reported in this study is that the economic impact of remittances is higher in the upper income group than in the lower income group...The differential impact of remittances might be due to the fact that most of the remittances are spent on consumption in lower income countries, while the households in the upper income countries have more opportunities to invest them profitably.A second paper, entitled Remittances and Financial Development: Substitutes or Complement in Economic Growth, came to this conclusion:[We] show that migrants' remittances positively affect...
I knew that Beijing has been cracking down on pollution, but I didn't know how they were going about it. It looks like authorities have banned vehicles on alternate days based on the last number of the vehicle's license plate. However, a representative of the Beijing Municipal Committee of Communications has said they will not extend the law after the end of the Olympic games.
I had heard about bans like this before in Mexico City. I've been told that wealthier families would often buy two cars and drive them on alternate days. As far as I have been able to find out, it looks like this idea started in 1986 with a program called Proconve in Sao Paolo. Apparently, local authorities have attributed large reductions in gaseous pollutants to the program. I'd love to know how many families...
Every year around this time, the Shanghai Jiao Tong University makes waves with its Academic Ranking of World Universities. As always, North America dominates in the short list of top 100 universities, with the Ivy League universities occupying most of the top slots. And as always, aggrieved parties produce howls of pain along with numerous complaints about methodological flaws - see a few examples here and here.
While there are certainly flaws, part of the problem lies in the inherent impossibility of ranking universities. These institutions devote themselves to many different tasks, while the Jiao Tong rankings examine only one task - research. (For an excellent discussion of the debate around rankings, see this commentary from Alex Usher of the Educational Policy Institute.) Jiao...
Brazilians have earned a reputation around the world for their beauty, boosted by fashion icons like Gisele Bündchen. But a recent article from the Science and Development Network sounded an alarm about the state of things in Brazil. Jonathan Wells, a reader in childhood nutrition at the UCL Institute of Child Health in London, commented on the alarming growth of obesity in Bündchen's homeland:In Brazil, between 1973 and 1996, obesity increased from 2.4 to 6.9 per cent in men and from 7.0 to 12.5 per cent in women. In simple terms, obesity arises when people consume more energy than they expend, either by eating too much or exercising too little.It may seem strange to sound an alarm about obesity while so much attention is being directed at rising food prices. (See, for example, this...
from the Houston Chronicle This shows the effect of rising rices i Latin America. The countries that are not large importers of oil have had the worst effects. -KaleByline: MARLA DICKERSONSAN SALVADOR, EL SALVADOR - Are exploding oil prices about to burn Latin America?With the largest petroleum reserves outside the Middle East, the region has been on a roll in recent years.Record exports of crude oil, as well as grains, fueled economic growth not seen since the 1970s. The region's stock markets roared. Easier credit spawned a consumer class that snapped up homes and cars.About 26 million Latin Americans climbed out of poverty between 2002 and 2006, according to U.N. data.But the same forces behind that new prosperity are now, paradoxically, creating misery.Surging fuel prices have...
Attempts to square the circle between business efficiency and social needs have been getting ever greater attention. The conversation over at Creative Capitalism is but one example among many. Harvard Business School has been working on these issues since at least 1993 through its Social Enterprise Initiative. Its most recent working paper, The Future of Social Enterprise, adds a new angle to the dialogue.
This new working paper lays out possible future scenarios for the development of the social enterprise sector. The paper lays out four possibilities depending on the future flow of funding and the ability of the sector to demonstrate results. In a high octance version of the future, the social sector would demonstrate high performance and receive large inflows of funding from...
from Eurodad "A new regional development bank for South America known as the ‘Banco del Sur’ will be launched with an initial capital fund of $10 billion”, finance ministers and other representatives of seven Latin American countries announced in late June. A statement released on Friday by the Argentine Economy Ministry said that the Bank of the South has entered the final stage of its formation. The ministerial meeting in Argentina followed one in Ecuador where technical options for operationalising the bank were discussed.The decision on the initial capital fund was taken at a meeting in Buenos Aires attended by economy ministers, deputy economy ministers and other representatives from Argentina, Bolivia, Brazil, Ecuador, Paraguay, Uruguay and Venezuela.Also last week - in Quito...
I decided to follow up on an earlier posting that cast some doubts on the value of the XO laptop for students in developing countries. Two commentors pointed out that even if the XO laptop does not produce direct improvements in classroom learning, there still may be other kinds of benefits. Serena had this to say:I personally believe that games–& interactive media–foster the 'soft' competency skills that contribute to learning development. The likes of Internet Relay Chat helped a generation of kids develop fast typing and response skills. Games that provide mental stimulation and can be scalable (to increase the level of challenge) similarly contribute to learning skills development.I don't dispute this argument, but I also don't think it necessarily means that governments...
Nancy Lee, a visiting fellow at the Center for Global Development, calls for a regional investment agreement for Latin America in an online Q&A posted today. She argues that a regional investment agreement would work much like free trade agreements, with member countries setting common standards to reduce barriers to investment. How could you measure whether members are complying with these standards? Lee argues that comparable data on things like the costs of starting a business and the strength of creditor rights would do the trick. ......
How difficult is it get a decent haircut in Tegucigalpa? Not nearly as difficult as it used to be, at least according to an article last month in the FT. Over the past year, the capital of Honduras has seen a drop in the number of procedures required to obtain an operating license for a business from 180 to 25 - in other words, from absurd to manageable. This reform has allowed Carlos Va??egas, a former army sergeant, to open up his own barbershop and obtain a loan to equip his establishment. In his own words:It took a few hours to do all the paperwork...I don't think we would have opened had it been like it was.And Mr. Va??egas is not the only one benefitting from such reforms. According to the article, the number of registered businesses has leaped from 22,000 to 34,000 between 2005...
It looks like Ethical Corporation has caught on to the ethics of serving the bottom of the pyramid. An article in their most recent newsletter discusses opportunities in the vast bottom of the pyramid market in Latin America. About 360 million people in Latin America fit into this category. So far, local companies have left multinationals in the dust:A third noteworthy trend is the leadership of national companies over their international peers. Micro-insurance firm Paralife in Mexico, Peruvian financial intermediary Cajasur and many of the other high performers in the index are local firms. With the bulk of their local market being low-income consumers, such firms have learned to search out opportunities among the ???majority??? by default. Multinational companies, by contrast, often...
You probably have not yet heard of Fundaci??n Paraguaya, but I have a hunch you'll be hearing a lot about them in the next few years. They are an impressive organization focused on alleviating poverty through the promotion of entrepreneurship. Fundaci??n Paraguaya combines an impressive number of functions under one roof. It consists of a self-sufficient agricultural high school that is combined with a microfinance facility.
Students at the school are taught basic business skills, and they apply these skills by working on farms, which in turn provide the income that funds the school. And the students don???t simply work on the farm for the sake of their labor???they have to make decisions about how best to make a profit from their labor, e.g. how many eggs must these chickens produce...
from ReutersBy Helen PopperLIMA (Reuters) - Political differences loomed over a summit of European and Latin American leaders in Peru on Friday, threatening to undermine their efforts to fight poverty and global warming.Leftist Bolivian President Evo Morales differed with his regional counterparts over free trade in the run-up to the meeting, while Venezuela's Hugo Chavez ratcheted up tensions in a conflict with neighboring Colombia.Free trade proponents like Peru are losing patience with skeptics like Bolivia's Morales, who accused Peru and Colombia this week of trying to exclude his nation from talks between the European Union and Andean countries."We can advance at different speeds, but let's advance," Peruvian President Alan Garcia said on Thursday, saying his country should be...
from Deutsche WelleThe EU-Latin America-Caribbean summit stressed in its final declaration Friday, May 16, in Lima that participants were "deeply concerned by the impact of increased food prices," citing troubled Haiti as an example."We agree that immediate measures are needed to assist the most vulnerable countries and populations affected by high food prices," the Lima Declaration said.European Union Foreign Relations Commissioner Benita Ferrero-Waldner said in the Peruvian capital that soaring global food prices constitute "a regional challenge." The EU has approved a package worth 117.25 million euros ($183 million dollars) for food aid around the world, she said.Signed by 60 countries at the end of the meeting, the declaration focused on the fight against poverty and climate change...
A spectacular lineup of performers including superstars Shakira, Los Tigres del Norte, Juanes, Juan Luis Guerra and Ricky Martin will join tonight in a call-to-action to support millions of children living in poverty in Latin America."El Concierto Por Los Niños" ("The Concert For The Children") is organized by ALAS (América Latina en Acción Solidaria), and will take place tonight simultaneously in Mexico and ArgentinaSome ALAS co-founders, including artists Shakira and Miguel Bosé; Mexican tycoon Carlos Slim Helú and philanthropist Howard Buffett, announced a commitment of more than $200 million to address the needs of the more than 32 million poor children in the region.The concert features some of Latin America's leading artists such as Maná, Alejandro Sanz, Calle 13, Carlos...
from the BBC By Dan Collyns Leaders from 50 European, Latin American and Caribbean nations are meeting in Peru to address poverty and the rise in world food prices.There have been few signs of compromise in trade negotiations ahead of the summit. Talks will be held in private.Simmering regional conflicts in Latin America threaten to overshadow any final agreement.Some 50,000 police have been drafted in for the summit, the fifth meeting of its kind in 10 years.Even before his arrival in Lima, Venezuela's President Hugo Chavez has already ruffled feathers both in Latin America and Europe.Free trade pushHe has upped his hostile rhetoric towards Colombian President Alvaro Uribe and he has accused the German chancellor, Angela Merkel, of being supported by the same German political right as...
from Inside Costa Rica World crisis on rising in food prices that, like all calamities, hardest hits poor people, came into the agenda of coming Euro-Latin American Summit Eurolat during recent hours.The addition of that topic to the agenda of the fifth Summit of Latin America and the Caribbean or European Union (ALC-UE) was announced by Foreign Minister Jose Gracia Belaunde on Friday, in the middle of much international concern on the rising food crisis.The topic is to be tackled as main in the summit, despite not appearing in the official agenda, which only considers the fight against poverty, social inclusion, climatic change and energy problems, the Minister indicated.It is a subject that has acquired particular seriousness in the last months, "Garcia Belaunde indicated in a visit...
from Caribbean 360BRIDGETOWN, Barbados, A senior official of the Economic Commission for Latin America and the Caribbean (ECLAC) has warned that unless urgent measures are taken to reduce the effects of rising food prices, the cases of extreme poverty will rise in Latin America and the Caribbean.Executive Secretary José Luis Machinea said that the steep and persistent rise in international food prices has been particularly hard on the poorest in the region, worsening income distribution.ECLAC has estimated that a 15 per cent rise in food prices will increase indigence by almost three points, from 12.7 per cent to 15.9 per cent. This means that elevating food prices will lead another 15.7 million Latin Americans to destitution and a similar number will also fall under the poverty line,...
The Financial Times and IFC announced shortlists of potential winners for the 2008 Sustainable Banking Awards. The awards recognize financial institutions that have led the way in integating their policies with social, environmental, and corporate governance objectives. Below is a sample the categories and the shortlisted candidates, the full list is available here.
Sustainable Bank of the Year
Banco Real, Brazil
Citi, US
HSBC, UK
Rabobank, Netherlands
Standard Chartered, UK
Sustainable Deal of the Year
BlueOrchard Finance, Switzerland/Morgan Stanley, US (microfinance loans)
Calyon, France (solar thermal power plants)
Citi, US (financing for rural housing)
Glitnir Bank, Iceland (geothermal power generation)
Merrill Lynch, US (carbon finance to reduce...
Word today that Western Union, the global money transfer service, is increasing its profile in the United States when it comes to selling new ways to send and receive money. This is just the latest in a series of steps Western Union has taken to get more involved in mobile services, which have grown exponentially in places like the Philippines and Kenya but have been less quick to catch on in markets where banking services are well-developed, such as the United States. The service will initially seek to reach Latino immigrants who are among the 40 million people in the US who lack access to basic banking services. How will it work? The Wall Street Journal explains:To use the service, people go to one of RadioShack's more than 4,000 stores and sign up for a Trumpet prepaid phone, which is...
A large number of firms in developing countries operate in the informal sector. It is often argued that informality lowers profits and growth, but is this true? A recent paper on Bolivia finds that formality leads indeed to higher profit - on average. However, distinguishing between firms of different sizes shows that it is only mid-sized firms that stand to benefit from formality, whereas both smaller and larger firms suffer....
En el 2007, FORAGRO (Foro de las Américas para la Investigación y Desarrollo Tecnológico Agropecuario) recolectó varios casos exitosos en el uso de tecnologías de información y comunicación (TIC) en proyectos o programas de investigación agropecuaria e innovación tecnológica.Este esfuerzo formó parte de un proyecto copatrocinado por el Foro Global de Investigación Agrícola (GFAR) como parte de su programa para promover la gestión de información y comunicaciones para la investigación y desarrollo agrícola.El reporte ha sido publicado (en format pdf). Contiene 6 casos exitosos:REDesastres: Una contribución a la gestión de desastres sanitarios en animales y plantasEl Sistema de alerta temprana sobre la roya asiática de la soja, Estado de Paraná, BrasilEl Sistema de...