World Bank Latin American and Caribbean Studies

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This regional flagship series features major development reports from the Latin America and Caribbean region unit of the World Bank. They aim to enrich the debate on the major development challenges and opportunities the region faces as it strives to meet the evolving needs of its people. Titles in this series undergo extensive internal and external review.

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The Evolving Geography of Productivity and Employment: Ideas for Inclusive Growth through a Territorial Lens in Latin America and the Caribbean

2024-01-25, Ianchovichina, Elena

The Evolving Geography of Productivity and Employment: Ideas for Inclusive Growth through a Territorial Lens in Latin America and the Caribbean employs a territorial lens to understand the persistently low economic growth rates in Latin America and the Caribbean (LAC). Using new data and methods, it shows that deindustrialization, distance, and divisions offer intertwined explanations for an urban productivity paradox in the LAC region: its highly dense cities should be among the world’s most productive, yet they are not. LAC cities have been held back by lack of dynamism, poor connectivity, and divisions into disconnected poor and affluent neighborhoods. Deindustrialization has shifted urban employment, especially in the largest LAC cities, away from manufacturing and toward less dynamic, low-productivity nontradable activities, such as retail trade and personal and other services, that profit less from agglomeration, especially in highly congested cities. Although employment in urban tradable services has risen, the increase has not been strong enough to offset the decline in manufacturing employment. Meanwhile, intercity connectivity issues have undermined the performance of the region’s network of cities by restricting market access and firms’ ability to benefit from specialization in smaller cities. Within cities, poor connectivity and residential labor market segregation have limited the gains from agglomeration to neighborhoods in central business districts where formal firms operate. Informality has persisted in low-income neighborhoods, where residents face multiple deprivations. By contrast, many agricultural and mining areas have benefited from the strong demand for commodities by China and other fast-growing economies, particularly during the Golden Decade (2003–13), leading to a decline in territorial inequality in most countries in the region. The report concludes that to encourage inclusive growth, countries must more efficiently transform natural wealth into human capital, infrastructure, and institutions and improve the competitiveness of the urban economy. It then sketches out the contours of such a development strategy, identifying policy priorities at the national, regional, and local levels.

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Raising the Bar for Productive Cities in Latin America and the Caribbean

2018-06-12, Ferreyra, Maria Marta, Roberts, Mark

With more than 70 percent of its population living in cities, Latin America and the Caribbean (LAC) is among the most urbanized regions in the world. Yet, although its cities are, on average, more productive than those elsewhere in the world, their productivity lags that of North American and Western European cities. Closing this gap provides LAC with the opportunity to raise living standards and join the ranks of the world’s richest countries. Raising the Bar: Cities and Productivity in Latin America and the Caribbean is about the productivity of cities in LAC and the factors that help to explain its determination. Based on original empirical research, the report documents the high levels of population density and other features of LAC cities that mark them out from those in the rest of the world. The report also studies the role of three key factors – urban form, skills, and access to markets – in determining the productivity of LAC cities. It shows that while excessive congestion forces and inadequate metropolitan coordination seem to be stifling the benefits of agglomeration, LAC cities benefit from strong human capital externalities. It also finds that, within individual LAC countries, cities are poorly integrated with one another, which contributes to large differences in performance across cities and undermines their aggregate contribution to productivity at the national level.