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Publication(Washington, DC: World Bank, 2021-03-29) World BankLatin America and the Caribbean suffered the largest death toll from Covid‐19 across developing regions and the sharpest decline in economic activity. With fewer school days and lower employment rates, with higher public debt and more firms under stress, the effects could be long‐lasting. The crisis also triggered large‐scale economic restructuring, with productivity higher in the expanding than in the contracting sectors. Accelerated digitization could instill dynamism in finance, trade and labor markets, but it may amplify inequality within and across the countries in the region. Technology could transform the energy sector as well. Latin America and the Caribbean has the cleanest and potentially cheapest electricity generation matrix of all developing regions. But its electricity is the most expensive, due mainly to inefficiencies. Distributed generation within countries and electricity trade across countries, could make energy greener and cheaper, provided that the pricing is right.
Publication(Washington, DC: World Bank, 2020-10-09) World BankLatin America and the Caribbean was hit hard by the Covid-19 pandemic, which arrived on the back of years of disappointing economic growth and limited social progress, and after a wave of social unrest. This report reviews the impacts of the crisis as well as the policy responses by countries, which often involved sizeable social transfers. It also presents growth forecasts, and quarterly growth estimates based on satellite imagery. With countries experiencing a diverse mix of health costs and economic costs, the report analyzes how the effectiveness of containment policies, and their impact on economic activity, differ between richer and poorer countries. It also assesses the cost of staying healthy in normal times, showing how it is affected by the structure of the domestic pharmaceutical sector and by the effectiveness of public procurement of medicines. As the region may have to live with the virus for a while, four policy directions are proposed for discussion.
Publication(Washington, DC: World Bank, 2020-04-12) World BankAfter a period of rapid economic growth associated with high commodity prices, the region had entered a phase of lackluster performance. Recent developments, including a new oil price shock, and the outbreak of the Covid-19 epidemic will push the region into recession. Many countries are struggling to contain the spread of the Covid-19 epidemic while avoiding a dramatic decline in economic activity. The report analyzes how to think about this tradeoff. It estimates the potential health costs, assesses the effectiveness of diverse containment strategies, and discusses how large the economic cost could be. The current crisis is unprecedented because it combines a fall in global demand, tighter financial conditions and a major supply shock. The response needs to consider how to socialize the losses, how to prevent a collapse of the financial sector, how to protect jobs and livelihoods, and how to manage and divest the assets that will inevitably end up in the hands of the state.
Publication(Washington, DC: World Bank, 2018) Messina, Julian ; Silva, JoanaWhat caused the decline in wage inequality of the 2000s in Latin America? Looking to the future, will the current economic slowdown be regressive? Wage Inequality in Latin America: Understanding the Past to Prepare for the Future addresses these two questions by reviewing relevant literature and providing new evidence on what we know from the conceptual, empirical, and policy perspectives. The answer to the first question can be broken down into several parts, although the bottom line is that the changes in wage inequality resulted from a combination of three forces: (a) education expansion and its effect on falling returns to skill (the supply-side story); (b) shifts in aggregate domestic demand; and (c) exchange rate appreciation from the commodity boom and the associated shift to the nontradable sector that changed interfirm wage differences. Other forces had a non-negligible but secondary role in some countries, while they were not present in others. These include the rapid increase of the minimum wage and a rapid trend toward formalization of employment, which played a supporting role but only during the boom. Understanding the forces behind recent trends also helps to shed light on the second question. The analysis in this volume suggests that the economic slowdown is putting the brakes on the reduction of inequality in Latin America and will likely continue to do so—but it might not actually reverse the region’s movement toward less wage inequality.