Person:
Canuto, Otaviano

Poverty Reduction and Economic Management, World Bank

Fields of Specialization

Growth and Poverty, Debt, Trade, Gender, Public Sector Management and Governance, Macro Prudential and Monetary Policies

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Departments

Poverty Reduction and Economic Management, World Bank

Last updated February 1, 2023

Biography

Otaviano Canuto is Vice President and Head of the Poverty Reduction and Economic Management (PREM) Network, a division of more than 700 economists and public sector specialists working on economic policy advice, technical assistance, and lending for reducing poverty in the World Bank’s client countries. He took up his position in May 2009, after serving as the Vice President for Countries at the Inter-American Development Bank since June 2007. Dr. Canuto provides strategic leadership and direction on economic policy formulation in the area of growth and poverty, debt, trade, gender, and public sector management and governance. He is involved in managing the Bank’s overall interactions with key partner institutions including the IMF and others. He has lectured and written widely on economic growth, financial crisis management, and regional development, with recent work on financial crisis and economic growth in Latin America. He speaks Portuguese, English, French and Spanish.

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Publication Search Results

Now showing 1 - 10 of 37

Gender Equality and Economic Growth in Brazil : A Long-run Analysis

(World Bank, Washington, DC, 2013-01) Agénor, Pierre-Richard ; Canuto, Otaviano

This paper studies the long-run impact of policies aimed at fostering gender equality on economic growth in Brazil. The first part provides a brief review of gender issues in the country. The second part presents a gender-based, three-period OLG model that accounts for women's time allocation between market work, child rearing, human capital accumulation, and home production. Bargaining between spouses depends on relative human capital stocks, and thus indirectly on access to infrastructure. The model is calibrated and various experiments are conducted, including investment in infrastructure, conditional cash transfers, a reduction in gender bias in the market place, and a composite pro-growth, pro-gender reform program. The analysis showed that fostering gender equality, which may partly depend on the externalities that infrastructure creates in terms of women's time allocation and bargaining power, may have a substantial impact on long-run growth in Brazil.
Monetary Policy and Macroprudential Regulation : Whither Emerging Markets

(World Bank, Washington, DC, 2013-01) Canuto, Otaviano ; Cavallari, Matheus

Confidence in combining inflation-targeting-cum-flexible-exchange-rate regimes with isolated microprudential regulation as a means to guarantee both macroeconomic and financial stability has been shattered by the scale and synchronization of asset price booms and busts that preceded the current global financial crisis. This paper has a two-fold purpose. On the one hand, it explores the implications and challenges of acknowledging the need for coordination between monetary policies and macroprudential regulation. On the other, it points out specific challenges currently faced by central bankers in emerging economies, as they cope with policy and regulatory coordination in a context of debt overhang and unconventional monetary policies in advanced economies.
Until Debt Do Us Part : Subnational Debt, Insolvency, and Markets

(Washington, DC: World Bank, 2013-02-13) Canuto, Otaviano ; Liu, Lili ; Canuto, Otaviano ; Liu, Lili

With decentralization and urbanization, the debts of state and local governments and of quasi-public agencies have grown in importance. Rapid urbanization in developing countries requires large-scale infrastructure financing to help absorb influxes of rural populations. Borrowing enables state and local governments to capture the benefits of major capital investments immediately and to finance infrastructure more equitably across multiple generations of service users. With debt comes the risk of insolvency. Subnational debt crises have reoccurred in both developed and developing countries. Restructuring debt and ensuring its sustainability confront moral hazard and fiscal incentives in a multilevel government system; individual subnational governments might free-ride common resources, and public officials at all levels might shift the cost of excessive borrowing to future generations. This book brings together the reform experiences of emerging economies and developed countries. Written by leading practitioners and experts in public finance in the context of multilevel government systems, the book examines the interaction of markets, regulators, subnational borrowers, creditors, national governments, taxpayers, ex-ante rules, and ex-post insolvency systems in the quest for subnational fiscal discipline. Such a quest is intertwined with a country’s historical, political, and economic context. The formal legal framework interacts with political reality to influence the dynamics of and incentives for reform. Often, the resolution of a subnational debt crisis unfolds in the context of macroeconomic stabilization and structural reforms. The book includes reforms that have not been covered by previous literature, such as those of China, Colombia, France, Hungary, Mexico, and South Africa. The book also presents a comprehensive review of how the United States developed its debt market for state and local local governments through a series of reforms that are path dependent, including the reforms and lessons learned following state defaults in the 1840s and the debates that shaped the enactment of Chapter 9 of the Bankruptcy Code in 1937. Looking forward, pressures on subnational finance are likely to continue—from the fragility of global recovery, the potentially higher cost of capital, refinancing risks, and sovereign risks. This book is essential reading for anyone wanting to know the challenges and reform options in debt restructuring, insolvency frameworks, and public debt market development.
Brazilian Exports : Climbing Down a Competitiveness Cliff

(World Bank, Washington, D.C., 2013-01) Canuto, Otaviano ; Cavallari, Matheus ; Guilherme Reis, José

This note examines in detail Brazil s export performance over the past 15 years, focusing not only on growth and composition, but also on different performance dimensions, including diversification, sophistication, and firm dynamics. The analysis uses international comparisons to better situate the Brazilian performance, and explores different databases, including firm-level data recently published by the World Bank. The note uses a recent diagnostic toolkit developed by the World Bank in order to suggest some hypotheses about the factors that have been inhibiting exports and industrial production expansion. Among the latter, it is noted how service sectors, as the largest beneficiaries from favorable terms of trade, accommodated larger wage increases and "exported" cost pressures to other sectors of the economy. Furthermore, although a stronger currency can be appointed as one of the elements behind the lower competitiveness in Brazilian exports, sluggish productivity performance and a real wage uptrend explain a significant part of the overall loss of competitiveness. This diagnostic reinforces the importance of resuming the agenda of microeconomic reforms, increasing the investment-to-gross domestic product ratio, and advancing toward better-skilled human capital.
Asset Prices, Macro Prudential Regulation, and Monetary Policy

(World Bank, Washington, DC, 2013-05) Canuto, Otaviano ; Cavallari, Matheus

Confidence in combining inflation-targeting-cum-flexible-exchange-rate regimes with isolated micro prudential regulation as a means to guarantee both macroeconomic and financial stability has been shattered by the scale and synchronization of the asset price booms and busts that preceded the global financial crisis. It has now become clear that if monetary policy makers and prudential regulators are to succeed in achieving stability, there can be no complacency regarding asset price cycles. This note explores some of the ways in which monetary policy can address asset price booms and busts through its integration with macro prudential regulation.
Dealing with the Challenges of Macro Financial Linkages in Emerging Markets

(Washington, DC: World Bank, 2013-10-11) Canuto, Otaviano ; Ghosh, Swati R. ; Canuto, Otaviano ; Ghosh, Swati R.

The 2008 financial crisis has highlighted the challenges associated with global financial integration and emphasized the importance of macro financial linkages. In the financial sector, attention is being directed toward macro prudential regulations that are geared toward the stability of the financial system as a whole. The Third Basel Accord (Basel III) aims to dampen the pro-cyclicality of the financial sector and to reduce cross sectional systemic risks partly by introducing measures to address liquidity and issues of banks being too big to fail. In the macro arena, the facts that price stability was not sufficient to guarantee macroeconomic stability and that financial imbalances developed despite low inflation and small output gaps have highlighted the need for additional tools (macro prudential policies) to complement monetary policy in countercyclical management. Emerging markets face different conditions and have key structural features that can have a bearing on the relevance and efficacy of the measures. The chapters in this volume discuss the challenges of dealing with macro financial linkages and explore the policy toolkit available for dealing with systemic risks with particular reference to emerging markets. This report is organized as follows: chapter one is adapting macro prudential approaches to emerging and developing economies; chapter two is adapting micro prudential regulation for emerging markets; chapter three presents capital flow volatility and systemic risk in emerging markets: the policy toolkit; chapter four presents monetary policy and macro prudential regulation: whither emerging markets; chapter five deals with macro prudential policies to mitigate financial vulnerabilities in emerging markets; chapter six presents sailing through the global financial storm; and chapter seven presents operation of macro prudential policy measures.
Avoiding Middle-Income Growth Traps

( 2012-11) Agénor, Pierre-Richard ; Canuto, Otaviano ; Jelenic, Michael

Since the 1950s, rapid growth has allowed a significant number of countries to reach middle-income status; yet, very few have made the additional leap needed to become high-income economies. Rather, many developing countries have become caught in what has been called a middle-income trap, characterized by a sharp deceleration in growth and in the pace of productivity increases. Drawing on the findings of a recently released working paper (Agenor and Canuto 2012), as well as a growing body of research on growth slowdowns, this note provides an analytical characterization of 'middle-income traps' as stable, low-growth economic equilibrium where talent is misallocated and innovation stagnates. To counteract middle-income traps, there are a number of public policies that governments can pursue, such as improving access to advanced infrastructure, enhancing the protection of property rights, and reforming labor markets to reduce rigidities all implemented within a context where technological learning and research and development (R&D) are central to enhancing innovation. Such policies not only explain why some economies particularly in East Asia were able to avoid the middle-income trap, but are also instructive for other developing countries seeking to move up the income ladder and reach high-income status.
The New Financial Landscape : What It Means for Emerging Market Economies

(World Bank, Washington, DC, 2012-09) Canuto, Otaviano ; García-Kilroy, Catiana ; Caputo Silva, Anderson

As the year 2012 unfolds, its main legacy will be its game changing impact on global financial markets. Waning global growth along with central banks' bold monetary easing policies in advanced economies (AEs) to try to reverse it are changing market dynamics in unexpected ways, across both AEs and emerging market economies (EMEs). The combination of monetary stimulus, fiscal austerity and hesitant structural economic policy reforms in AEs, particularly in Europe, is taking the global financial system into increasingly uncharted territory. How the European Union will address the future of the euro zone, including uncertainties over its banking sector, as well as how the United States handles its Fiscal Cliff, will weigh heavily on economic balances across all economies worldwide. This seems to be a significant point of inflection on the speed of the rebalancing of economic relevance of AEs in favor of EMEs taking place over the last 12 years. Under this scenario, the ability of EMEs to handle their own fiscal, financial, and real economy weaknesses is critically tied to their ability to weather external shocks and take advantage of growing global savings while searching for yield and growth opportunities.
Fiscal Policy for Growth and Development

(World Bank, Washington, DC, 2012-10) Brahmbhatt, Milan ; Canuto, Otaviano

The global economic crisis that broke out in 2008 has reawakened interest in fiscal policy. In the early stages of the crisis, there was a widespread turn to countercyclical fiscal stimulus. Furthermore, the recent euro area crisis has underlined the importance of long-term fiscal sustainability for macroeconomic stability. More subtly, the global crisis has also refocused interest in fiscal policy as an instrument for longer-term growth and development. In the potential 'new normal' of continued sluggishness in the advanced world, developing countries have strong incentives to seek out new domestic engines for efficiency and productivity growth, as well as for greater equity in development. The potential of fiscal policy to promote these ends is therefore of great interest to developing country policy makers. This note focuses on that potential and provides an overview of how fiscal positions in developing countries have evolved in the wake of the crisis, as well as some emerging policy lessons. It then sketches a conceptual framework for thinking about the connections between fiscal policy and longer-term growth and development. Finally, this note highlights some findings about the connections between fiscal policy and development.
The Brazilian Competitiveness Cliff

(World Bank, Washington, DC, 2013-02) Canuto, Otaviano ; Reis, Jose Guilherme ; Cavallari, Matheus

Brazilian exports of goods and services have grown sharply in recent years, with sales nearly three times higher in 2010 than in 2000. However, Brazil faces considerable competitiveness challenges: its export performance depends mostly on favorable geographical and sector composition effects. Such challenges increased after the recent global economic crisis. A recent slowdown in industrial exports, production, and investments seems related to supply-side difficulties stemming from a wide range of inefficiencies and rising costs, rather than insufficient demand. Although a stronger currency is one of the factors behind the lower competitiveness of Brazil's manufacturing exports, sluggish productivity performance, lack of dynamism at the firm level, and a real wage uptrend seem to explain a significant part of the overall loss of competitiveness. This diagnostic reinforces the urgency of resuming the agenda of microeconomic reforms, increasing the investment-to-Gross Domestic Product (GDP) ratio, and advancing toward better-skilled human capital.