Maloney, William Francis

Person:
Maloney, William Francis

Office of the Chief Economist Latin America and the Caribbean Region

Fields of Specialization

Innovation, Labor Economics, Trade, Productivity, Private Sector Development, Financial Sector, Spatial economics

Departments

Office of the Chief Economist Latin America and the Caribbean Region

Last updated April 4, 2023

Biography

William F. Maloney is Chief Economist for the Latin America and Caribbean (LAC) region. Mr. Maloney, a U.S. national, joined the Bank in 1998 as Senior Economist for the Latin America and Caribbean Region. He held various positions including Lead Economist in the Office of the Chief Economist for Latin America, Lead Economist in the Development Economics Research Group, Chief Economist for Trade and Competitiveness and Global Lead on Innovation and Productivity. He was most recently Chief Economist for Equitable Growth, Finance and Institutions (EFI) Vice Presidency. From 2011 to 2014 he was Visiting Professor at the University of the Andes and worked closely with the Colombian government on innovation and firm upgrading issues. Mr. Maloney received his PhD in Economics from the University of California Berkeley (1990), his BA from Harvard University (1981), and studied at the University of the Andes in Bogota, Colombia (1982-83). His research activities and publications have focused on issues related to international trade and finance, developing country labor markets, and innovation and growth, including several flagship publications about Latin America and the Caribbean.He has published in academic journals on issues related to international trade and finance, developing country labor markets, and innovation and growth as well as several flagship publications of the Latin American division of the Bank, including Informality: Exit and Exclusion; Natural Resources: Neither Curse nor Destiny and Lessons from NAFTA, Does What you Export Matter: In Search of Empirical Guidance for Industrial Policy. Most recently, he published The innovation paradox: Developing Country Capabilities the Unrealized Potential of Technological Catch-Up and Harvesting Prosperity: Technology and Productivity Growth in Agriculture as part of the World Bank Productivity Project.

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Now showing 1 - 10 of 11

Spatial Dimensions of Trade Liberalization and Economic Convergence : Mexico 1985-2002

(Oxford University Press on behalf of the World Bank, 2005-09-01) Aroca, Patricio ; Bosch, Mariano ; Maloney, William F.

This article employs established techniques from the spatial economics literature to identify regional patterns of income and growth in Mexico and to examine how they have changed over the period spanned by trade liberalization and how they may be linked to the income divergence observed following liberalization. The article first shows that divergence has emerged in the form of several income clusters that only partially correspond to traditional geographic regions. Next, when regions are defined by spatial correlation in incomes, a south clearly exists, but the north seems to be restricted to the states directly on the United States (U.S.) border and there is no center region. Overall, the principal dynamic of both the increased spatial dependency and the increased divergence lies not on the border but in the sustained underperformance of the southern states, starting before the North American free-trade agreement, and to a lesser extent in the superior performance of an emerging convergence club in the north-center of the country.
The Distribution of Income Shocks during Crises : An Application of Quantile Analysis to Mexico, 1992-95

(Washington, DC: World Bank, 2004-05) Maloney, William F. ; Cunningham, Wendy V. ; Bosch, Mariano

Moving beyond the simple comparisons of averages typical of most analyses of household income shocks, this article employs quantile analysis to generate a complete distribution of such shocks by type of household during the 1995 crisis in Mexico. It compares the distributions across normal and crisis periods to see whether observed differences were due to the crisis or are intrinsic to the household types. Alternatively, it asks whether the distribution of shocks during normal periods was a reasonable predictor of vulnerability to income shocks during crises. It finds large differences in the distribution of shocks by household types both before and during the crisis but little change in their relative positions during the crisis. The impact appears to have been spread fairly evenly. Households headed by people with less education (poor), single mothers, or people working in the informal sector do not appear to experience disproportionate income drops either in normal times or during crises.
Evaluating Emergency Programs

(World Bank, Washington, DC, 2001-12) Maloney, William F.

Emergency programs are designed to soften the impact of economic crises-income shocks experienced by an entire community or country-on consumption and human capital accumulation. Of particular concern are poor people: as a result of inadequate savings or inadequate access to credit or insurance markets, the poor are unable to draw on resources from better times to offset a loss in income today. Further, the systemic nature of the shocks means that risk cannot be effectively pooled through local informal insurance mechanisms. Emergency interventions have included social funds, workfare programs, training programs, conditional transfers (linked to health center visits or children's school attendance, for example), and traditional direct, unconditional transfers in kind (such as communal tables or targeted food handouts). The author highlights some conceptual problems in choosing among these options and evaluating one program of a certain type relative to another. It argues that most such interventions can be thought of as containing both a transfer and an investment component and that their evaluation as emergency programs needs to more explicitly incorporate the intertemporal nature of their design. More specifically, the mandated investments in physical or human capital will benefit the poor, but only in the future-after the crisis-and their implementation diverts resources from alleviating present hardship. This needs to be reflected in the discount factor used to evaluate these investments. Maloney argues that the way emergency programs are financed, particularly the way the burden is shared between central and municipal governments, also has important implications for the criteria for evaluation. The analysis suggests that most conventional means of evaluating projects-net present value at market discount rates, labor intensity, cost per job created-may not be relevant or are at least ambiguous in the context of emergency programs. As a result, policymakers are left with few "hard" indicators with which to evaluate such programs. Maloney argues for an approach in which the policymaker weighs the appropriateness of deviations from the theoretically "ideal" benchmark program, which delivers a "smart" transfer costlessly to the target beneficiary, and discusses the arguments for or against these deviations. The modest goal of the proposed approach is to clarify the key issues and provide more solid grounding for the necessarily subjective judgment calls that policymakers will inevitably have to make.
Trade Structure and Growth

(World Bank, Washington, DC, 2003-04) Lederman, Daniel ; Maloney, William F.

Lederman and Maloney examine the empirical relationships between trade structure and economic growth, particularly the influence of natural resource abundance, export concentration, and intra-industry trade. They test the robustness of these relationships across proxies, control variables, and estimation techniques. The authors find trade variables to be important determinants of growth, especially natural resource abundance and export concentration. In contrast with much of the recent literature, natural resource abundance appears to have a positive effect on growth, whereas export concentration hampers growth, even after controlling for physical and human capital accumulation, among other factors.
Measuring the Impact of Minimum Wages : Evidence from Latin America

(World Bank, Washington, DC, 2001-04) Maloney, William F. ; Nunez, Jairo ; Cunningham, Wendy ; Fiess, Norbert ; Montenegro, Claudio ; Murrugarra, Edmundo ; Santamaria, Mauricio ; Sepulveda, Claudia

The authors provide an overview of minimum wage levels in Latin America and their true impact on the distribution of wages, using both numerical measures and kernal density plots for eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Honduras, Mexico, and Uruguay). They especially try to identify "numeraire" effects--where the minimum is used as a reference higher in the wage distribution--and "lighthouse" effects--where it influences wage setting in the unregulated or "informal" sector. Their main findings: First, statutory minimum wages are often misleading, and graphical methods may be more reliable. Second, the minimum wage's effect on wage setting extends far beyond what is usually considered and probably beyond the effect in industrial countries. Using panel employment data from Colombia, where minimum wages seem high and binding, the authors quantify the minimum wage's effects on wages and on the probability of becoming unemployed. The Colombian case confirms the evidence offered by kernal density estimates: 1) The minimum wage can have an important impact on wage distribution in the neighborhood of the minimum wage. 2) The effects echo up the wage distribution in a clear demonstration of the "numeraire" effect. That this effect is stronger in Latin America than in the United States suggests that the minimum wage induces further-reaching rigidities in the labor market. The trade-off between any possible effect on poverty and reduced flexibility is likely to be more severe in countries where this is the case. The effects on employment, and unemployment, are substantial. 3) Informal salaries wages are also affected, confirming the graphical evidence of strong lighthouse effects. Self-employment earnings are not, however, confirming that the minimum wage is not simply serving as a measure of inflationary expectations.
Human Capital, Trade Liberalization, and Income Risk

(World Bank, Washington, DC, 2007-07) Krebs, Tom ; Krishna, Pravin ; Maloney, William

Using data from Mexico, the authors study empirically the link between trade policy and individual income risk and the extent to which this varies across workers of different human capital (education) levels. They use longitudinal income data on workers to estimate time-varying individual income risk parameters in different manufacturing sectors in Mexico between 1987 and 1998, a period in which the Mexican economy experienced substantial changes in trade policy. In a second step, they use the variations in trade policy across different sectors and over time to estimate the link between trade policy and income risk for workers of varying education levels. The authors' findings are as follows. The level of openness of an economy is not found to be related to income risk for workers of any type. Furthermore, changes in trade policy (that is, trade policy reforms) are not found to have any effect on the risk to income faced by workers with either low or high levels of human capital. But workers with intermediate levels of human capital are found to experience a statistically and economically significant increase in income risk immediately following liberalization of trade. The findings thus point to an interesting non-monotonicity in the interaction between human capital, income risk and trade policy changes.
Spatial Dimensions of Trade Liberalization and Economic Convergence: Mexico 1985-2002

(World Bank, Washington, DC, 2005-10) Aroca, Patricio ; Bosch, Mariano ; Maloney, William F.

This paper studies the spatial dimension of growth in Mexico over the past three decades. The literature on regional economic growth shows a decrease in regional dispersion from 1970 to 1985, and a sharp increase afterward coinciding with the trade liberalization of the Mexican economy. Using spatial econometric, tools the authors analyze how the process of convergence/divergence has mapped spatially and whether it makes sense to talk about spatial regions in Mexico. Although the rich North-poor South dichotomy has dominated this phenomenon, interesting patterns emerge. Namely the distribution of growth after Mexico's post-liberalization seems to be much less associated with distance to the United States than the authors had initially expected.
Income Risk, Income Mobility and Welfare

(World Bank, Washington, DC, 2012-10) Krebs, Tom ; Krishna, Pravin ; Maloney, William F.

This paper develops a framework for the quantitative analysis of individual income dynamics, mobility and welfare. Individual income is assumed to follow a stochastic process with two (unobserved) components, component representing measurement error or transitory income shocks and an Autoregressive (AR(1)) component representing persistent changes in income. The analysis uses a tractable consumption-saving model with labor income risk and incomplete markets to relate income dynamics to consumption and welfare, and derive analytical expressions for income mobility and welfare as a function of the various parameters of the underlying income process. The empirical application of the framework using data on individual incomes from Mexico provides striking results. Much of measured income mobility is driven by measurement error or transitory income shocks and therefore (almost) welfare-neutral. A smaller part of measured income mobility is due to either welfare-reducing income risk or welfare-enhancing catching-up of low-income individuals with high-income individuals, both of which have economically significant effects on social welfare. Decomposing mobility into its fundamental components is thus seen to be crucial from the standpoint of welfare evaluation.
Export Quality Dynamics

( 2011-06-01) Krishna, Pravin ; Maloney, William F.

Country export quality (measured by unit values) is correlated with income level suggesting that studying quality dynamics potentially offers insights into the development process. This paper uses highly disaggregated trade data to explore the export quality (unit value) dynamics of goods exported to the United States over the 1990-2000 period. In addition to finding considerable heterogeneity in the relative quality of exports across countries and across goods within countries, the authors find that the rate of quality growth varies substantially across countries, as well. Specifically, the fastest growth is seen in exports from the richer (OECD) countries, implying an evolving divergence in product quality across regions. This divergence obtains despite evidence of conditional convergence in quality over time- goods with lower initial relative quality levels experience faster growth in quality. The data suggest that part of this divergence is driven by the product mix itself -- OECD exported products experience intrinsically higher growth rates. This is consistent with the argument of Hausmann, Hwang and Rodrik (2007) that what countries export does matter for growth. However, it is partly driven by a higher growth rate of quality in the richer countries independent of convergence effects, suggesting that other country-specific factors impeding overall convergence are at work. Finally, there is very limited technological "leap-frogging" by countries across product lines as the relative quality of new exports, on average, is roughly the same as incumbent exports, both in richer countries and elsewhere.
Natural Resources : Neither Curse nor Destiny

(Washington, DC: World Bank, 2007) Lederman, Daniel ; Maloney, William F.

This volume studies the role of natural resources in development and economic diversification. It brings together a variety of analytical perspectives, ranging from econometric analyses of economic growth to historical studies of successful development experiences in countries with abundant natural resources.