Does public financial support stimulate innovation and productivity? An impact evaluation

This paper contributes to the empirical literature that evaluates the effects of public financial support to innovation on innovation expenditures, innovation itself and productivity in developing countries. Propensity score matching techniques and data from Innovation Surveys are used to analyse the impacts of public financial support to innovation on Uruguayan firms. The results indicate that there is no crowding-out effect of private innovation investment by public funds and that public financial support in Uruguay seems to increase private innovation expenditures. Financial support also appears to induce increased research and development expenditures and innovative sales, with these effects being greatest for service firms. Public funds do not, however, significantly stimulate private expenditures by firms that would have carried out innovation activities even in the absence of financial support.

A comparative analysis of productivity in Brazilian and Mexican manufacturing industries

This article analyses productivity trends in Brazilian and Mexican manufacturing industries between 1995 and 2009, a period in which international competition intensified sharply. A total of 14 manufacturing industries are considered, using two methods based on: (i) the Leontief (1951) model to measure the consumption of intermediate goods used in production; and (ii) the analysis of total factor productivity (TFP). The studies performed show that manufacturing trends have diverged in the two countries. In Mexico, an increased need for imported goods and services was offset by a reduction in domestic goods and service requirements, and an increase in the TFP of production. In the case of Brazil, the fact that manufactured goods markets are more isolated from foreign trade seems to have contributed to a weak productivity performance.

Productivity, social expenditure and income distribution in Latin America

This paper discusses the role of institutions and structural change in shaping income inequality. It is argued that while social expenditure and direct redistribution are crucial for improving income distribution, sustainable equality requires structural change to create decent jobs. The relative importance of these variables in different countries is analyzed and a typology suggested. It is argued that the most equal countries in the world combine strong institutions in favor of redistribution and knowledge-intensive production structures that sustain growth and employment in the long run. Both institutions and the production structure in Latin America fail to foster equality and this explains its extremely high levels of inequality. The last decade witnessed significant advances in reducing inequality in Latin America, but these advances are threatened by slow productivity growth and weak structural change.