Month – January 2015

Latin America’s Advice to Europe: Be Decisive!

By Eduardo Cavallo, Eduardo Fernández-Arias and Andrew Powell This week, the IMF cut its growth forecasts for the Eurozone by 0.2 and 0.3 percentage points for 2015 and 2016, prompting it to cut its global economic growth forecasts by a similar magnitude. Clearly, economic expectations are turning increasingly pessimistic. The reasons that could explain this “economic pessimism” are broad […]

Crime and Violence: An Expensive Problem

The costs of Latin America’s alarming levels of crime and violence go far beyond even the suffering of the direct victims. They have very real economic, as well as social, repercussions. In Uruguay, crime-related costs absorb 3.2 percent of GDP, diverting critical resources from more productive economic priorities. In Mexico, violence increases unemployment, closes businesses, […]

A Comparative Disadvantage for Latin American Entrepreneurs

Entrepreneurship in Latin America bears no resemblance to that of other regions: beginning with size—most businesses are micro or small— and ending with motivation—entrepreneurs are what they are more “by necessity” than “by opportunity.” On top of these traits, Latin American entrepreneurs have little appetite for risk and innovation which, together with the limited availability […]

Productive Development Policies in a Nutshell: A Tale of Two Interventions

Productive development policies (or industrial policies) can prove to be a key tool for a country’s development. Yet, as experience in Latin America clearly shows, they can also create serious problems. Nevertheless, these policies take a variety of forms. The key question is: what types of industrial policies should be adopted and which ones should […]

The Do’s and Don’ts of “Nudging”

How can governments guide people to make choices that would improve their  welfare? Traditionally, the focus has been on changing prices; for instance, higher cigarette taxes encourage people to smoke less. Lately, “nudges” have become a favorite tool, and are becoming increasingly popular  in developed and developing countries alike. Latin American governments are no exception […]

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