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
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Firms’ Productivity and Workers’ Wages
Does the productivity of your firm affect your pay? Standard microeconomic theory says no. Firms have no power over setting wages when markets are perfectly competitive. All they can do is hire as many workers as they need for each type of labor at their respective market wages. Clearly, this view runs contrary to popular perception. Some firms pay higher wages than others. In … [Read more...] about Firms’ Productivity and Workers’ Wages
Finding the Recipe for Successful Productive Development Policies
Latin America boasts a wealth of creativity and resources. Since the turn of the century, its creative industries—from Argentina to Colombia to Mexico—have been flourishing. However, the region has been getting bad grades in productivity, a key ingredient for development. Its levels of research and development are low. Compared to rich countries, its productivity has been … [Read more...] about Finding the Recipe for Successful Productive Development Policies
Keeping Kids in School
Over the last 25 years, Latin America has ramped up investment in education in a full-fledged effort to reduce poverty and spur economic growth. Today, primary school attendance is nearly universal, with three out of four children finishing primary school on time. At the secondary school level, meanwhile, the rate of on-time graduation has soared from an average of 30% in 1990 … [Read more...] about Keeping Kids in School
A New Tool to Help Boost Incomes
Colombian Finance Minister Mauricio Cardenas once posed a question in an international meeting that has resounded as among the most significant for government planners. A finance minister has limited resources and a narrow window of reform. In which sectors will reform pay off most in terms of increasing per capita incomes? As countries in Latin America and the Caribbean—and … [Read more...] about A New Tool to Help Boost Incomes