Publication:
Financial Services and Trade Agreements in Latin America and the Caribbean : An Overview

Loading...
Thumbnail Image
Files in English
English PDF (533.92 KB)
402 downloads
English Text (184.75 KB)
170 downloads
Date
2007-04
ISSN
Published
2007-04
Editor(s)
Abstract
The authors review the international framework governing trade in financial services, describe the treatment of financial services in recent trade agreements involving Latin America and Caribbean countries, and analyze the liberalization commitments made in three selected country case studies-Chile, Colombia, and Costa Rica. They give emphasis to free trade agreements because of the generally deeper level of liberalization and rule-making achieved to-date. The authors discuss some of the causes and potential implications of their findings.
Link to Data Set
Citation
Goncalves, Marilyne Pereira; Stephanou, Constantinos. 2007. Financial Services and Trade Agreements in Latin America and the Caribbean : An Overview. Policy Research Working Paper; No. 4181. © World Bank. http://hdl.handle.net/10986/7042 License: CC BY 3.0 IGO.
Associated URLs
Associated content
Report Series
Report Series
Other publications in this report series
  • Publication
    Geopolitics and the World Trading System
    (Washington, DC: World Bank, 2024-12-23) Mattoo, Aaditya; Ruta, Michele; Staiger, Robert W.
    Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.
  • Publication
    The Macroeconomic Implications of Climate Change Impacts and Adaptation Options
    (Washington, DC: World Bank, 2025-05-29) Abalo, Kodzovi; Boehlert, Brent; Bui, Thanh; Burns, Andrew; Castillo, Diego; Chewpreecha, Unnada; Haider, Alexander; Hallegatte, Stephane; Jooste, Charl; McIsaac, Florent; Ruberl, Heather; Smet, Kim; Strzepek, Ken
    Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.
  • Publication
    Global Poverty Revisited Using 2021 PPPs and New Data on Consumption
    (Washington, DC: World Bank, 2025-06-05) Foster, Elizabeth; Jolliffe, Dean Mitchell; Ibarra, Gabriel Lara; Lakner, Christoph; Tettah-Baah, Samuel
    Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.
  • Publication
    Global Socio-economic Resilience to Natural Disasters
    (Washington, DC: World Bank, 2025-05-22) Middelanis, Robin; Jafino, Bramka Arga; Hill, Ruth; Nguyen, Minh Cong; Hallegatte, Stephane
    Most disaster risk assessments use damages to physical assets as their central metric, often neglecting distributional impacts and the coping and recovery capacity of affected people. To address this shortcoming, the concepts of well-being losses and socio-economic resilience—the ability to experience asset losses without a decline in well-being—have been proposed. This paper uses microsimulations to produce a global estimate of well-being losses from, and socio-economic resilience to, natural disasters, covering 132 countries. On average, each $1 in disaster-related asset losses results in well-being losses equivalent to a $2 uniform national drop in consumption, with significant variation within and across countries. The poorest income quintile within each country incurs only 9% of national asset losses but accounts for 33% of well-being losses. Compared to high-income countries, low-income countries experience 67% greater well-being losses per dollar of asset losses and require 56% more time to recover. Socio-economic resilience is uncorrelated with exposure or vulnerability to natural hazards. However, a 10 percent increase in GDP per capita is associated with a 0.9 percentage point gain in resilience, but this benefit arises indirectly—such as through higher rate of formal employment, better financial inclusion, and broader social protection coverage—rather than from higher income itself. This paper assess ten policy options and finds that socio-economic and financial interventions (such as insurance and social protection) can effectively complement asset-focused measures (e.g., construction standards) and that interventions targeting low-income populations usually have higher returns in terms of avoided well-being losses per dollar invested.
  • Publication
    From Patriarchy to Policy
    (Washington, DC: World Bank, 2025-05-29) Bussolo, Maurizio; Rexer, Jonah M.; Hu, Lynn
    Legal institutions play an important role in shaping gender equality in economic domains, from inheritance to labor markets. But where do gender equal laws come from? Using cross-country data on social norms and legal equality, this paper investigates the socio-cultural roots of gender inequity in the legal system and its implications for female labor force participation. To identify the impact of social norms, the analysis uses an empirical strategy that exploits pre-modern differences in ancestral patriarchal culture as an instrument for present-day gender norms. The findings show that ancestral patriarchal culture is a strong predictor of contemporary norms, and conservative social norms are associated with more gender inequality in the de jure legal framework, the de facto implementation of laws, and the labor market. The paper presents evidence for a political selection mechanism linking norms to laws: countries with more conservative norms elect political leaders who are more hostile to gender equality, who then pass less progressive legislation. The results highlight the cultural roots and political drivers of legalized gender inequality.
Journal
Journal Volume
Journal Issue

Related items

Showing items related by metadata.

  • Publication
    Liberalization of Trade in Financial Services : Lessons from Latin America and the Caribbean
    (2008-01-01) Stephanou, Constantinos
    This policy note is based on a project on financial services and trade agreements in the Latin America and Caribbean Region. It emphasizes that the liberalization of trade in financial services is helpful to, but is not a panacea for, domestic financial system modernization. It adds that the means of liberalizing trade in financial services may also determine the extent of the benefits that can be attained and that any trade commitments in financial services will need to be aligned with China's financial system condition and policy objectives. The author points out however, that China can also draw useful policy lessons from the Latin America and Caribbean (LCR) experience when negotiating financial services in Preferential Trade Arrangement (PTAs) by firstly, the inclusion of financial services which depends greatly on the existence of offensive interests and of asymmetric bargaining powers between the negotiating counterparts; secondly, the case studies which strongly indicate the importance of initial conditions and historical experience in shaping a country's financial services trade strategy; thirdly, the scheduling approach of the (typically self-contained) financial services chapter which both contributes to, and is determined by, the willingness to liberalize; and finally the authorities should be cognizant of important nuances between the two main negotiating templates.
  • Publication
    Liberalization of Trade in Financial Services : Lessons from Latin America and the Caribbean
    (Washington, DC, 2008-01) World Bank
    This policy note is based on a project on financial services and trade agreements in the Latin America and Caribbean Region. It emphasizes that the liberalization of trade in financial services is helpful to, but is not a panacea for, domestic financial system modernization. It adds that the means of liberalizing trade in financial services may also determine the extent of the benefits that can be attained and that any trade commitments in financial services will need to be aligned with China's financial system condition and policy objectives. The author points out however, that China can also draw useful policy lessons from the Latin America and Caribbean (LCR) experience when negotiating financial services in Preferential Trade Arrangement (PTAs) by firstly, the inclusion of financial services which depends greatly on the existence of offensive interests and of asymmetric bargaining powers between the negotiating counterparts; secondly, the case studies which strongly indicate the importance of initial conditions and historical experience in shaping a country's financial services trade strategy; thirdly, the scheduling approach of the (typically self-contained) financial services chapter which both contributes to, and is determined by, the willingness to liberalize; and finally the authorities should be cognizant of important nuances between the two main negotiating templates.
  • Publication
    Financial Services and Preferential Trade Agreements : Lessons from Latin America
    (World Bank, 2010) Haddad, Mona; Stephanou, Constantinos
    This book deals with financial liberalization issues in the context of trade negotiations. The liberalization of trade and investment in financial services is only a subset of the broader financial liberalization agenda. The purpose of trade and investment liberalization is to increase financial market access and remove discriminatory and other access-impeding barriers to foreign competition. By contrast, the main purpose of financial liberalization is to remove distortions in domestic financial systems that impede competition and the allocation of capital to its most productive and profitable uses. In turn, financial liberalization can be divided into domestic financial reform and capital account opening, and there is a rich literature on its appropriate speed and sequencing. The first part of the book covers the fundamental principles that affect trade liberalization in financial services at both the multilateral and the regional levels. It analyzes the various models of preferential trade agreements (PTAs) used by negotiators and the architectural differences of these models. The second part of this book provides concrete examples of how countries have negotiated these agreements by focusing on the specific country experiences of Chile, Colombia, and Costa Rica. These case studies provide the reader with a thorough understanding of how countries strategize, negotiate, and implement regional trade agreements in financial services.
  • Publication
    Dominican Republic, Central American Free Trade Agreement (DR-CAFTA) : Challenges and Opportunities for Central America
    (Washington, DC, 2005-12) World Bank
    This report provides a preliminary assessment of DR-CAFTA (the , with particular attention to three key themes: (1) expected trade and non-trade benefits, (2) actions that Central American countries need to pursue to capitalize optimally on the new opportunities, and (3) identification of the population groups that may require assistance to adapt to a more competitive environment. The report focuses on the developing countries of Central America, namely Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua. The analysis presented in the report shows that the vast majority of the population in Central America is likely to experience welfare gains from implementation of DR-CAFTA, even in the short run. At the same time, the removal of trade barriers in sensitive agricultural crops could adversely affect a small share of the population living in rural areas in Central America. Although provisions in DR-CAFTA will allow for long timetables in reducing tariffs for the most sensitive products, appropriate support programs may need to be designed. In addition, selective investments in education, rural infrastructure, rural finance, and technical assistance will be required to ensure that the rural poor have the means to take full advantage of the new opportunities arising out of DR-CAFTA. Chapter 1 of the report reviews the main findings of the chapters in the order in which they appear. Chapter 2 places DR-CAFTA in the historical context of the economic reforms that Central American countries have been undertaking since the late 1980s. Chapter 3 provides a summary overview of the recently negotiated DR-CAFTA, with special attention on the extent to which the agreement's provisions would significantly change market access for Central American goods and services, and also on how far they could be expected to consolidate prior reforms. Chapter 4 reviews various analyses that assess the potential impacts of DR-CAFTA on the developing countries of Central America. Chapter 5 focuses on the identification and quantification of potentially affected populations from the easing of trade restrictions in sensitive agricultural products, and analyzes policy options to assist vulnerable groups. Chapter 6 reviews evidence related to key macroeconomic implications of DR-CAFTA, namely the potential revenue losses that might be produced by the removal of import taxes and the treaty's potential effect on the patterns of business-cycle synchronization. Chapter 7 reviews evidence from each Central American country in the areas of trade facilitation, institutional and regulatory reforms, and innovation and education, in order to identify key priorities for the complementary agenda for DR-CAFTA.
  • Publication
    Regional Integration and Technology Diffusion : The Case of the North America Free Trade Agreement
    (World Bank, Washington, DC, 2003-09) Schiff, Maurice; Wang, Yanling
    The literature on regional integration agreements (RIAs) is vast and deals with political, economic, and political economy issues. The literature on the economics of RIAs deals mostly with static effects, and concludes that these effects are, in general, ambiguous. So far there has been no empirical analysis of the dynamic effects of RIAs based on their impact on technology diffusion from partner and nonpartner countries. Schiff and Wang's paper is a first attempt in this direction. The authors examine the impact of the North America Free Trade Agreement (NAFTA) on total factor productivity in Mexico through its impact on trade-related technology transfers from OECD countries. They estimate trade-related technology diffusion by using a measure of trade-related foreign research and development (R&D). Foreign R&D is constructed based on industry-specific R&D in the OECD, OECD-Mexico trade patterns, and input-output relations in Mexico. The authors find that: Mexico's trade with its NAFTA partners had a large and significant impact on Mexico's total factor productivity, while trade with the rest of the OECD did not. Simulating the impact of NAFTA has led to a permanent increase in total factor productivity in Mexico's manufacturing sector of between 5.5 percent and 7.5 percent and to some convergence with the economies of Canada and the United States.

Users also downloaded

Showing related downloaded files

  • Publication
    Governance Matters IV : Governance Indicators for 1996-2004
    (World Bank, Washington, DC, 2005-06) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.
  • Publication
    Governance Matters VIII : Aggregate and Individual Governance Indicators 1996–2008
    (2009-06-01) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org.
  • Publication
    Measuring Financial Inclusion : The Global Findex Database
    (World Bank, Washington, DC, 2012-04) Demirguc-Kunt, Asli; Klapper, Leora
    This paper provides the first analysis of the Global Financial Inclusion (Global Findex) Database, a new set of indicators that measure how adults in 148 economies save, borrow, make payments, and manage risk. The data show that 50 percent of adults worldwide have an account at a formal financial institution, though account penetration varies widely across regions, income groups and individual characteristics. In addition, 22 percent of adults report having saved at a formal financial institution in the past 12 months, and 9 percent report having taken out a new loan from a bank, credit union or microfinance institution in the past year. Although half of adults around the world remain unbanked, at least 35 percent of them report barriers to account use that might be addressed by public policy. Among the most commonly reported barriers are high cost, physical distance, and lack of proper documentation, though there are significant differences across regions and individual characteristics.
  • Publication
    Design Thinking for Social Innovation
    (2010-07) Brown, Tim; Wyatt, Jocelyn
    Designers have traditionally focused on enchancing the look and functionality of products.
  • Publication
    Government Matters III : Governance Indicators for 1996-2002
    (World Bank, Washington, DC, 2003-08) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.