Person: Herrera, Santiago
Middle East and North Africa
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Macroeconomics, Egypt, International Finance, Expenditure Efficiency Measurement and Benchmarking, Latin America
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Middle East and North Africa
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Last updated: February 1, 2023
Biography
Santiago Herrera Aguilera is the Lead Country Economist for Egypt in the Middle East and North Africa region at the World Bank. He has been in this position since September of 2008. He first joined the Bank in May of 1998 as a Senior Economist working for the Latin America and Caribbean Region. In February of 2004 he became the Lead Economist for economic policy at the Poverty Reduction and Economic Management Network in Washington. Prior to joining the Bank, Aguilera was the Deputy Minister of Finance in Columbia from 1995 to 1996. Before that, he was the Director of the National Budget also at the Columbian Ministry of Finance. Aguilera holds a Doctor of Philosophy in Economics from Columbia University in New York. He also holds a Masters degree in Economics from the Universidad de Los Andes in Bogota, Columbia.
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Publication Search Results
Now showing 1 - 6 of 6
Publication Internal Migration in Egypt : Levels, Determinants, Wages, and Likelihood of Employment(World Bank, Washington, DC, 2012-08) Badr, Karim; Herrera, SantiagoThis paper describes stylized facts about internal migration and the labor force in Egypt, and shows how internal migration in the country is low compared with international standards. Using aggregate labor force survey data, the paper shows how individuals migrate to governorates with higher wages. With a Mincerian equation, the analysis finds that migrants earn premiums with respect to non-migrants, except for those migrants with low education levels. The aggregate labor statistics reveal lower unemployment rates among migrants, a phenomenon that is verified by an employment equation. According to the econometric results, migrants are more likely to be employed, even after controlling for other observable individual characteristics. Finally, the paper estimates a Probit model for the decision to migrate, finding that more educated individuals are more likely to migrate, agricultural workers have a lower probability of migrating, and individuals from governorates in which food production for own consumption is higher are less likely to migrate. These results suggest that low educational attainment and the "food problem", which ties resources to food production to meet subsistence requirements, are at the root of low migration in Egypt.Publication Egypt beyond the Crisis : Medium-Term Challenges for Sustained Growth(2010-10-01) Selim, Hoda; Herrera, Santiago; Youssef, Hoda; Zaki, ChahirThe paper analyzes the impact of the recent global crisis in the context of the previous two decades' growth and capital flows. Growth decomposition exercises show that Egyptian growth is driven mostly by capital accumulation. To estimate the share of labor in national income, the analysis adjusts the national accounts statistics to include the compensation of self-employed and non-paid family workers. Still, the share of labor, about 30 percent, is significantly lower than previously estimated. The authors estimate the output costs of the current crisis by comparing the output trajectory that would have prevailed without the crisis with the observed and revised gross domestic product projections for the medium term. The fall in private investment was the main driver of the output cost. Even if private investment recovers its pre-crisis levels, there is a permanent loss in gross domestic product per capita of about 2 percent with respect to the scenario without the crisis. The paper shows how the shock to investment is magnified due to the capital-intensive nature of the Egyptian economy: if the economy had the traditionally-used share of labor in income (40 percent), the output loss would have been reduced by half.Publication Heterogeneity in Returns to Investment in Education in Egypt(World Scientific, 2013-09-25) Herrera, SantiagoThe paper estimates the rates of return to investment in education in Egypt, allowing for multiple sources of heterogeneity across individuals. The paper finds that, in the period 1998–2006, returns to education increased for workers with higher education, but fell for workers with intermediate education levels; the relative wage of illiterate workers also fell in the period. This change can be explained by supply and demand factors. On the supply side, the number workers with intermediate education, as well as illiterate ones, outpaced the growth of other categories joining the labor force during the decade. From the labor demand side, the Egyptian economy experienced a structural transformation by which sectors demanding higher-skilled labor, such as financial intermediation and communications, gained importance to the detriment of agriculture and construction, which demand lower-skilled workers. In Egypt, individuals are sorted into different educational tracks, creating the first source of heterogeneity: those that are sorted into the general secondary-university track have higher returns than those sorted into vocational training. Second, the paper finds that large-firm workers earn higher returns than small-firm workers. Third, females have larger returns to education. Female government workers earn similar wages as private sector female workers, while male workers in the private sector earn a premium of about 20 percent on average. This could lead to higher female reservation wages, which could explain why female unemployment rates are significantly higher than male unemployment rates. Formal workers earn higher rates of return to education than those in the informal sector, which did not happen a decade earlier. And finally, those individuals with access to technology (as proxied by personal computer ownership) have higher returns.Publication Macroeconomic Shocks and Banking Sector Developments in Egypt(World Bank, Washington, DC, 2013-01) Youssef, Hoda; Herrera, SantiagoFrom 2008 to 2011, Egypt was hit by significant shocks, both global and country-specific. This paper assesses the impact of the resulting macroeconomic instability on the banking sector, and examines its role as a shock absorber. The Central Bank of Egypt accommodated the shocks by supplying liquidity to the market. The paper verifies a change in the fiscal regime from one in which the primary fiscal balance was used an instrument to stabilize the public debt ratio to one in which the policy instrument stopped playing that role and affected investors' assessment of the risk of holding public debt. This pattern suggests that fiscal conditions influenced exchange rate and price expectations originating a fiscal dominance situation in which the Central Bank could not control inflation. Hence, the Central Bank lacked functional independence in spite of its de jure independence, which underscores the importance of strengthening institutions that facilitate policy coordination and allow policy to be more predictable. The government also funds itself through non-market mechanisms, in a typical financial repression scheme. The paper estimates the revenue from financial repression at about 2.5 percent of gross domestic product in 2011, which together with the revenues from seignoriage add up to close to 50 percent of the budgeted tax revenues, indicating the need for an in-depth review of the governance of the public banks and the funding of public sector activities. Finally, the paper estimates the impact of shocks to macroeconomic variables on loan portfolio quality and bank capital.Publication Why Don’t Banks Lend to Egypt’s Private Sector?(World Bank, Washington, DC, 2012-06) Hurlin, Christophe; Herrera, Santiago; Zaki, ChahirBank credit to Egypt's private sector decreased over the last decade, despite a recapitalized banking system and high rates of economic growth. Recent macro-economic turmoil has reinforced the trend. This paper explains the decrease based on credit supply and demand considerations by 1) presenting stylized facts regarding the evolution of the banks' sources and fund use in 2005 to 2011, noting two different cycles of external capital flows, and 2) estimating private credit supply and demand equations using quarterly data from 1998 to 2011. The system of simultaneous equations is estimated both assuming continuous market clearing and allowing for transitory price rigidity entailing market disequilibrium. The main results are robust to the market clearing assumption. During the global financial crisis, a significant capital outflow stalled bank deposit growth, which in turn affected the private sector's credit supply. At the same time, the banking sector increased credit to the government. Both factors reduced the private sector's credit supply during the period under study. After the trough of the global crisis, capital flowed back into Egypt and deposit growth stopped being a drag on the supply side, but bank credit to the government continued to drive the decrease in the private sector's credit supply. Beginning in the final quarter of 2010, capital flows reversed in tandem with global capital markets, and in January 2011 the popular uprising that ousted President Hosni Mubarak added an Egypt-specific shock that accentuated the outflow. Lending capacity dragged again, accounting for 10 percent of the estimated fall in private credit. Credit to the government continued to drain resources, accounting for 70 - 80 percent of the estimated total decline. Reduced economic activity contributed around 15 percent of the total fall in credit. The relative importance of these factors contrasts with that of the preceding capital inflow period, when credit to the government accounted for 54 percent of the estimated fall, while demand factors accounted for a similar percentage.Publication Why Does the Productivity of Education Vary across Individuals in Egypt? Firm Size, Gender, and Access to Technology as Sources of Heterogeneity in Returns to Education(2011-07-01) Badr, Karim; Herrera, SantiagoThe paper estimates the rates of return to investment in education in Egypt, allowing for multiple sources of heterogeneity across individuals. The paper finds that, in the period 1998-2006, returns to education increased for workers with higher education, but fell for workers with intermediate education levels; the relative wage of illiterate workers also fell in the period. This change can be explained by supply and demand factors. On the supply side, the number workers with intermediate education, as well as illiterate ones, outpaced the growth of other categories joining the labor force during the decade. From the labor demand side, the Egyptian economy experienced a structural transformation by which sectors demanding higher-skilled labor, such as financial intermediation and communications, gained importance to the detriment of agriculture and construction, which demand lower-skilled workers. In Egypt, individuals are sorted into different educational tracks, creating the first source of heterogeneity: those that are sorted into the general secondary-university track have higher returns than those sorted into vocational training. Second, the paper finds that large-firm workers earn higher returns than small-firm workers. Third, females have larger returns to education. Female government workers earn similar wages as private sector female workers, while male workers in the private sector earn a premium of about 20 percent on average. This could lead to higher female reservation wages, which could explain why female unemployment rates are significantly higher than male unemployment rates. Formal workers earn higher rates of return to education than those in the informal sector, which did not happen a decade earlier. And finally, those individuals with access to technology (as proxied by personal computer ownership) have higher returns.