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Bussolo, Maurizio

Office of the Chief Economist for Europe and Central Asia

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Income distribution, International trade, Economics of aging, Economics of saving

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Office of the Chief Economist for Europe and Central Asia

Last updated January 31, 2023

Biography

Maurizio Bussolo, lead economist in the Chief Economist Office for Europe and Central Asia, has been working on quantitative analyses of economic policy and development both in research and operational departments at the World Bank for more than 12 years. He has led operational teams in the aftermath of the 2008-09 crisis negotiating with LAC governments implementation of reforms to shield the most vulnerable. He previously worked at the OECD, at the Overseas Development Institute in London, and at Fedesarrollo and the Los Andes University in Colombia. He has extensively published in peer-reviewed journals on trade, growth, poverty and income distribution, economics of aging, saving and investment. He holds a PhD in economics from the University of Warwick.

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Now showing 1 - 10 of 46

Gender Aspects of the Trade and Poverty Nexus : A Macro-Micro Approach

(Washington, DC: World Bank and Palgrave Macmillan, 2009) Bussolo, Maurizio ; De Hoyos, Rafael E. ; Bussolo, Maurizio ; De Hoyos, Rafael E.

This report is on the findings of a major international research project examining the links between trade, gender, and poverty. Trade liberalization can create economic opportunities, but women and men cannot take advantage of these opportunities on an equal basis. Women and men differ in their endowments, control over resources, access to labor markets, and their roles within the household. It may seem obvious that gender differences play an important role in transmitting the effects of trade expansion to poverty, especially in less developed countries, where gender inequality is usually more pronounced. Although the literature includes numerous analyses on the links between trade and poverty and between gender inequality and poverty, it seems not to have combined these two sets of studies in a consistent empirical framework. The main objective for the research project documented in this book was to fill, at least in part, this gap in the literature. This report describes the simplest conceptual framework that can be used to analyze the linkages between trade and poverty through gender. It includes two parts. The first, based on standard international trade models, considers the linkages between trade and gender. The second, based mainly on the microeconomic models of household behavior, deals with the linkages between gender and poverty.
Shared Prosperity : Paving the Way in Europe and Central Asia

(Washington, DC: World Bank, 2014-04-09) Bussolo, Maurizio ; Lopez-Calva, Luis F.

The World Bank has recently defined two strategic goals: ending extreme poverty and boosting shared prosperity. Shared prosperity is measured as income growth among the bottom 40 percent of the income distribution in the population. The two goals should be achieved in a way that is sustainable from economic, social, and environmental perspectives. Shared Prosperity: Paving the Way in Europe and Central Asia focuses on the second goal and proposes a framework that integrates both macroeconomic and microeconomic elements. The macro variables, particularly changes in relative prices, affect income growth differentially along the income distribution; at the same time, the microeconomic distribution of assets at the bottom of the distribution determines the capacity of the bottom 40 to take advantage of the macroeconomic environment and contribute to overall growth. Growth and the incidence of growth are thus understood as jointly determined processes. Besides this integration, the main input of the framework is the finding that the trade-off between growth and equity may be an issue only in the short run. Over the long run, redistribution policies that increase the productive capacity of the bottom 40 percent enhance the overall growth potential of the economy. This report considers shared prosperity in Europe and Central Asia and concludes that the performance in sharing prosperity during the period 2000–10 was good, on average, but heterogeneous across countries and that sustainability is unclear. It also describes examples of the application of the framework to selected countries in the region. Finally, the report provides a tool to structure the policy discussion around the goal of shared prosperity and explains that specific policy links associated with the goal can be established only after a thorough analysis of the country-specific context.
Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses, and Policy Options for Jamaica

(World Bank, Washington, DC, 2007-03) Bussolo, Maurizio ; Medvedev, Denis

Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing the reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, the authors show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially negative effects of remittances.
Remittances and the Real Exchange Rate

(World Bank, Washington, DC, 2007-04) Lopez, Humberto ; Molina, Luis ; Bussolo, Maurizio

Existing empirical evidence indicates that remittances have a positive impact on a good number of development indicators of recipient countries. Yet when flows are too large relative to the size of the recipient economies, as those observed in a number of Latin American countries, they may also bring a number of undesired problems. Among those probably the most feared in this context is the Dutch Disease. This paper explores the empirical evidence regarding the impact of remittances on the real exchange rate. The findings suggest that remittances indeed appear to lead to a significant real exchange rate appreciation. The paper also explores policy options that may somewhat offset the observed effect.
Global Growth and Distribution : Are China and India Reshaping the World?

(World Bank, Washington, DC, 2007-11) Bussolo, Maurizio ; De Hoyos, Rafael E. ; Medvedev, Denis ; van der Mensbrugghe, Dominique

Over the past 20 years, aggregate measures of global inequality have changed little even if significant structural changes have been observed. High growth rates of China and India lifted millions out of poverty, while the stagnation in many African countries caused them to fall behind. Using the World Bank's LINKAGE global general equilibrium model and the newly developed Global Income Distribution Dynamics (GIDD) tool, this paper assesses the distribution and poverty effects of a scenario where these trends continue in the future. Even by anticipating a deceleration, growth in China and India is a key force behind the expected convergence of per-capita incomes at the global level. Millions of Chinese and Indian consumers will enter into a rapidly emerging global middle class-a group of people who can afford, and demand access to, the standards of living previously reserved mainly for the residents of developed countries. Notwithstanding these positive developments, fast growth is often characterized by high urbanization and growing demand for skills, both of which result in widening of income distribution within countries. These opposing distributional effects highlight the importance of analyzing global disparities by taking into account - as the GIDD does - income dynamics between and within countries.
Challenges to MDG Achievement in Low Income Countries : Lessons from Ghana and Honduras

(World Bank, Washington, DC, 2007-11) Bussolo, Maurizio ; Medvedev, Denis

This paper summarizes the policy lessons from applications of the Maquette for MDG Simulations (MAMS) model to two low income countries: Ghana and Honduras. Results show that costs of MDGs achievement could reach 10-13 percent of GDP by 2015, although, given the observed low productivity in the provision of social services, significant savings may be realized by improving efficiency. Sources of financing also matter: foreign aid inflows can reduce international competitiveness through real exchange appreciation, while domestic financing can crowd out the private sector and slow poverty reduction. Spending a large share of a fixed budget on growth-enhancing infrastructure may mean sacrificing some human development, even if higher growth is usually associated with lower costs of social services. The pursuit of MDGs increases demand for skills: while this encourages higher educational attainments, in the short term this could lead to increased income inequality and a lower poverty elasticity of growth.
Do Regional Trade Pacts Benefit the Poor? An Illustration from the Dominican Republic-Central American Free Trade Agreement in Nicaragua

(World Bank, Washington, DC, 2006-02) Bussolo, Maurizio ; Niimi, Yoko

The main objective of this paper is to provide an ex-ante assessment of the poverty and income distribution impacts of the Central American Free Trade Area agreement on Nicaragua. The authors use a general equilibrium macro model to simulate trade reform scenarios and estimate their price effects, while a micro-module maps these price changes into real income changes at the individual household level. A useful insight from this analysis is that even if the final total impact on poverty is not too large, its dispersion across households-due to their heterogeneity of factor endowments, inputs use, commodity production, and consumption preferences-is significant and should be taken into account when designing compensatory policies. Additionally, growth and redistribution decomposition show that, at least in the short to medium run, redistribution can be as important as growth. The main policy message that emerges from the paper is that Nicaragua should consider enlarging its own liberalization to countries other than the United States to boost trade-induced poverty reductions.
The Impact of Commodity Price Changes on Rural Households : The Case of Coffee in Uganda

(World Bank, Washington, DC, 2006-12) Bussolo, Maurizio ; Godart, Olivier ; Lay, Jann ; Thiele, Rainer

Policies and external shocks affecting agriculture, the main source of income for rural households, can be expected to have a significant impact on poverty. The authors study the case of Uganda. Throughout the 1990s, more than 90 percent of its poor lived in rural areas and, during the same period, large international price fluctuations as well as an extensive domestic deregulation affected the coffee sector, its main source of export revenues. Using data from three household surveys covering the 1990s, the authors confirm a strong correlation between changes in coffee prices (in a liberalized market) and poverty reduction. This is highlighted by comparing the performance of different households grouped according to their dependence on coffee farming. Regression analysis (based on pooled data from the three surveys) of consumption expenditure on coffee-related variables, other controls, and time-fixed effects corroborates that the mentioned correlation is not spurious. The authors also find that while both poor and rich farmers enter the coffee sector, the price boom benefits the poorer households relatively more, whereas the liberalization seems to create more opportunities for richer farmers. Finally, notwithstanding the importance of the coffee price boom, the agricultural policy framework and the thorough structural reforms in which the coffee market liberalization was embedded have certainly played a role in triggering overall agricultural growth. These factors appear to matter especially in the second half of the 1990s when prices went down but poverty reduction continued.
Structural Change and Poverty Reduction in Brazil : The Impact of the Doha Round

(World Bank, Washington, DC, 2006-02) Bussolo, Maurizio ; Lay, Jann ; van der Mensbrugghe, Dominique

Over the medium time horizon, skill upgrading, differentials in sectoral technological progress, and migration of labor out of farming activities are some of the major structural adjustment factors shaping the evolution of an economy and its connected poverty trends. The main focus of the authors is understanding, for the case of Brazil, how a trade shock interacts with these structural forces and ascertaining whether it enhances or hinders medium-term poverty reduction. In particular, they consider the interactions between the migration of labor out of agriculture, a potentially important poverty reduction factor, and trade liberalization, which increases the price incentives to stay in agriculture. A recursive-dynamic computable general equilibrium model simulates Doha scenarios and compares them against a business as usual scenario. The authors estimate the poverty effects using a microsimulation model that primarily takes into account individuals' labor supply decisions. Their analysis shows that trade liberalization does contribute to structural poverty reduction. But unless increased productivity and stronger growth rates are attributed to trade reform, its contribution to medium-term poverty reduction is rather small.
Capital Will Not Become More Expensive as the World Ages

(World Bank Group, Washington, DC, 2014-07) Bussolo, Maurizio ; Lim, Jamus Jerome ; Maliszewska, Maryla ; Timmer, Hans

Aging of populations and convergence between developed and developing countries in per capita incomes are shaping the evolution of saving, investment, capital flows, and, in particular, the cost of capital. When considering these trends, the existing literature argues for either continued, low interest rates, or sharply rising ones. This paper presents an alternative view: modest rises in interest rates, which result from a combination of increases in the global weight of high-saving developing economies (limiting declines in global saving), and decelerations in the rate of growth in developing countries (constraining upward pressure in global investment). For the majority of countries, slowing capital demand resulting from decelerating growth, coupled with structural changes that influence its attractiveness as a destination for capital, moderate increases in interest rates. Changes in key assumptions do not alter this view. More specifically, the small rise in interest rates persists even in a scenario where growth in developing countries decelerates more slowly, or when elasticities governing the behavior of saving and investment are varied.