Global economic developments, 1999

Includes bibliography

Brazil’s Northeast Financing Constitutional Fund: Differentiated effects on municipal economic growth

This article investigates the effects of the investments made by the Northeast Financing Constitutional Fund (FNE) on the economic growth of that region's municipalities in the decade of 2000. To that end, it uses an empirical framework based on growth models that make it possible to form convergence clubs according to the municipalities' initial development level. The results corroborate the empirical strategy and reveal the existence of four groups of municipalities, in which investment flows through the FNE have different effects on growth. In general, the FNE produces positive and significant effects in most municipalities of the Northeast, except for those whose gross domestic product (GDP) per capita was either very low or very high at the start of the decade, in which case its effects are not significant.

Paraguay: a housing finance proposal for middle- to low-income groups

The construction and ownership of homes is fundamental to economic development, the generation of wealth and the formation of the middle class. Although a number of studies have been conducted and programmes implemented in recent decades, there remains a significant housing deficit in Paraguay and Latin America, indicating that such programmes have been unsuccessful. For families unable to document a steady income, the main obstacle to homeownership is often financing. This paper aims to demonstrate the economic and financial feasibility —provided there is sufficient political will and coordination between public and private entities— of a project to build 75,000 homes for 300,000 people (4.5% of the Paraguayan population) with middle to low incomes. The median household income in this segment, for which there is a significant shortage of decent housing, is US$ 396.50. A maximum of US$ 63.44 per month may be set aside for housing costs.