Policymakers have long accepted the central role of innovation in spurring aggregate productivity and growth. They have looked at the arrival of new systems of organization and new technologies, from the steam engine to electricity and the internet, as catalysts to material progress in the modern age. But in doing so, they may have underestimated the importance of another … [Read more...] about When an Excess of Small Firms Hurts Productivity
#Mexico
Bringing Order to the Fight Against Urban Corruption
Over the last three years, the media in Latin America has been offered a rich harvest of scandal. Brazil's Lava Jato affair, involving the diversion of money from contracts at the state-run oil company to personal and party coffers, has led to more than 200 arrests and 80 convictions. A Guatemalan president and vice-president were driven from office over a multi-million dollar … [Read more...] about Bringing Order to the Fight Against Urban Corruption
Fighting the Fossil Fuel Addiction
For a region that is very vulnerable to climate change, Latin America remains highly dependent on fossil fuels. Around 40% of the region's energy generation still comes from oil, natural gas, and coal. Moreover, supporting fossil fuels is costly to governments. According to a paper by the International Monetary Fund, the average country in the region spends around 1% of its GDP … [Read more...] about Fighting the Fossil Fuel Addiction
Interest Rates are Falling, But Not So Fast
By Andrés Fernández, Daniel Hernaiz and Andrew Powell Most of the largest economies in Latin America have adopted inflation targeting [1]. A huge advantage of having such an anchor, and not relying on a fixed exchange rate to curb diverging expectations, is that the exchange rate is then determined by the market and can adjust to shocks. Given the large shocks the region has … [Read more...] about Interest Rates are Falling, But Not So Fast
Latin America and Trump: the IDB’s Chief Economist Identifies Potential Opportunities for the Region
Latin America, like the rest of the world, cautiously awaits the beginning of Donald Trump's presidency in the United States. There is great anticipation to see if the president elect fulfills his campaign promises—many of them already played down—and how his government's policies affect the region. In an interview with the Spanish daily El País, the IDB's chief economist, José … [Read more...] about Latin America and Trump: the IDB’s Chief Economist Identifies Potential Opportunities for the Region