ECLAC Notes Nº 27

Road Maps Towards an Information Society Latin America and the Caribbean in the World Economy 2001-2002 Op-ed by José Antonio Ocampo, ECLAC's Executive Secretary: Our Digital Opportunity Highlights. International Transportation and Integration: Challenges Pending Indicators Study Emphasizes the Importance of Redistributing Income to Reduce Poverty in Latin America Recent Titles Calendar of events

Updated Economic Overview of Latin America and the Caribbean 2013

Includes bibliography.

Structural constraints and determinants of economic growth in Cuba

Includes bibliography.

Economic Survey of Latin America and the Caribbean 2014: Challenges to sustainable growth in a new external context

Includes bibliography.

Capital Flows to Latin America and the Caribbean: Recent Developments

For six years, the global economy has been driven by the U.S. Federal Reserve’s policies of easy money. Liquidity has flowed from developed to developing economies, financing infrastructure and corporate investment and allowing consumers to indulge in credit-fuelled retail spending. Thus the effective ending of the Fed’s third round of asset purchases (QE3) at the end of October represents both a watershed and the beginning of a new stage in the world economy. The end of asset-purchases comes at a challenging time for emerging markets, with China’s economy slowing, the Euro zone struggling to avoid a recession and the Japanese economy already in recession. The unwinding of the U.S. monetary stimulus, while the European Central Bank and the Bank of Japan step up their monetary stimulus, has underpinned an appreciation by the U.S. dollar, in which most commodities are priced. An appreciated dollar makes dollar-denominated commodities more expensive to buyers, thereby creating pressure for sellers to lower their prices. Latin American markets ended the third quarter of 2014 under pressure from a stronger U.S. dollar. In this changing external context, there are many signs that a slowdown in Latin American and Caribbean (LAC) financial markets, particularly debt markets, which have been breaking issuance records for the past six years, may slowdown from now on. Commodity prices – including those of oil, base metals and some goods – are in a prolonged slump. The Bloomberg commodity price index, a benchmark of commodity investments, has fallen to a five-year low as China’s economy slows down, and with it the demand for commodities. Investment into the LAC region has decelerated, in large part because of a deceleration of mining investments. Latin American currencies have suffered depreciations, as current account deficits have widening for a number of countries. And LAC companies, having issued record amounts of foreign currency bonds may now struggle to service their debt. In October, credit-rating agency Moody’s downgraded the bonds of Brazil’s Petrobras to tow notches above speculative grade because of the impact of falling oil prices and the weaker real on its debt. Growth prospects look brighter in 2015 relative to 2014, but a strengthening U.S. dollar, uneven global growth and weakness in commodity prices are skewing the risk toward the downside for the 2015 forecasts across the region. The Institute of International Finance expects the strengthening of the dollar to have a divergent impact across the region, however, depending on trade and financial linkages. The Institute of International Finance, Capital Flows to Emerging Markets, October 2, 2014. A stronger dollar lifts U.S. purchasing power, supporting exports, growth and capital inflows in countries with close trade links to the U.S. economy. However, rising dollar financing costs will increase pressure on countries with weak external positions. Given the effects of falling oil prices and a stronger dollar, some companies in the region, having issued record amounts of foreign currency bonds, may now struggle to service their debts. Prospects of Fed rate hikes resulting in tighter global liquidity amid the rapid rise in the corporate external bond stock has indeed raised concerns over some companies. However, there is still a shortage of bonds at a global level and the region still enjoys good economic policy management for the most part, so LAC debt markets may continue to enjoy momentum despite occasional bursts of high volatility – even if not at the record levels of recent years.

The employment situation in Latin America and the Caribbean: Recovery of employment: towards a sustainable model

The adverse effects on Latin America and the Caribbean of the global economic and financial crisis, the worst since the 1930s, have been considerably less than was once feared. Although a run of growth was cut short in 2009 and regional output shrank by 1.9%, the impact of the crisis was limited by the application of countercyclical fiscal and monetary policies by many of the region’s governments. The recovery in the economies, particularly in South America, has gone hand-in-hand with the rapid resurgence of the emerging economies of Asia, with all the favourable consequences this has had for global trade. A similar pattern may be observed regarding the impact of the crisis on labour markets in Latin America and the Caribbean. Although millions of people lost their jobs or had to trade down to lower-quality work, levels of employment (including formal employment) fell by less than originally foreseen. At the same time, real wages rose slightly in a context of falling inflation. The labour market thus stabilized domestic demand, and this contributed to the recovery that began in many countries in late 2009. Improved international trade and financing conditions, and the pick-up in domestic demand driven by macroeconomic policies, have led different commentators to estimate growth in the region’s economy at some 6% in 2010. As detailed in the first part of this edition of the Bulletin, the upturn has been manifested at the regional level by the creation of formal employment, a rise in the employment rate, a decline in joblessness and a moderate increase in real wages. Specifically, it is estimatedthat the regional unemployment rate will have dropped by 0.6 percentage points, from 8.1% in 2009 to 7.5% in 2010. The performance of different countries and subregions has been very uneven, however. On the one hand, there is Brazil, where high economic growth has been accompanied by vigorous creation of formal jobs and the unemployment rate has dropped to levels not seen in a long time. Other countries in South America have benefited from strong demand for natural resources from the Asian countries. Combined with higher domestic demand, this has raised their economic growth rates and had a positive impact on employment indicators. On the other hand, the recovery is still very weak in certain countries and subregions, particularly in the Caribbean, with employment indicators continuing to worsen.Thus, the recovery in the region’s economy in 2010 may be characterized as dynamic but uneven. Growth estimates for 2011 are less favourable. The risks associated with the imbalances in the world economy and the withdrawal of countercyclical fiscal packages are likely to cause the region to grow more slowly in 2011. Accordingly, a small further reduction of between 0.2 and 0.4 percentage points in the unemployment rate is projected for 2011. However, these indicators of recovery do not guarantee growth with decent work in the long term. To bolster the improvement in labour market indicators and generate more productive employment and decent work, the region’s countries need to strengthen their macroeconomic policies, improve regional and global policy coordination, identify and remove bottlenecks in the labour market itself and enhance instruments designed to promote greater equality. Like the rest of the world, the Latin American and Caribbean region is also confronted with the challenge of transforming the way it produces so that its economies can develop along tracks that are sustainable in the long term. Climate change and the consequent challenge of developing and strengthening low-carbon production and consumption patterns will also affect the way people work. A great challenge ahead is to create green jobs that combine decent work with environmentally sustainable production patterns. From this perspective, the second part of this Bulletin discusses the green jobs approach, offering some information on the challenges and opportunities involved in moving towards a sustainable economy in the region and presenting a set of options for addressing environmental issues and the repercussions of climate change in the world of work. Although the debate about the green jobs concept is fairly new in the region, examples already exist and a number of countries have moved ahead with the application of policies and programmes in this area. Costa Rica has formulated a National Climate Change Strategy, for example, whose foremost achievements include professional training in natural-resource management. In Brazil, fuel production from biomass has increased and social housing with solar panelling is being built. A number of other countries in the region are making progress in areas such as ecotourism, sustainable agriculture and infrastructure for climate change adaptation, and in formalizing the work of people who recycle household waste. The shift towards a more environmentally sustainable economy may cause jobs to be destroyed in some economic sectors and created in others. The working world will inevitably undergo major changes. If the issue is approached by way of social dialogue and appropriate public policies, there is a chance to use this shift to create more decent jobs, thereby contributing to growth in the economy, the construction of higher levels of equality and protection for the environment.

Economic and Social Panorama of the Community of Latin American and Caribbean States 2014

This issue of the Economic and Social Panorama of the Community of Latin American and Caribbean States is a contribution by the Economic Commission for Latin America and the Caribbean (ECLAC) to the third Summit of Heads of State and Government of the Community of Latin American and Caribbean States (CELAC), to be held in San José in January 2015. This document is based on excerpts from some of the annual flagships published by the Commission in 2014: Statistical Yearbook for Latin America and the Caribbean 2013 (LC/G.2582-P); Demographic Observatory 2013 (LC/G.2615-P); Economic Survey of Latin America and the Caribbean 2014 (LC/G.2619-P); Preliminary Overview of the Economies of Latin America and the Caribbean 2014 (LC/G.2632-P); Foreign Direct Investment in Latin America and the Caribbean 2013 (LC/G.2615-P); Latin America and the Caribbean in the World Economy 2014 (LG/G.2625-P) “Social Panorama Social of Latin America 2014. Briefing Paper”; as well as the Gender Equality Observatory of Latin America and the Caribbean. Annual Report 2013-2014 (LC/G.2626).

Caracterização espectroscópica e estudo do comportamento térmico dos resíduos provenientes da cana-de-açúcar

Coordenação de Aperfeiçoamento de Pessoal de Nível Superior (CAPES)

Review of CARIFORUM-EU EPA in development cooperation and WTO compatability

The Cotonou Agreement which succeeded the Lomé IV Agreement and was signed in Cotonou in June 2000 established a comprehensive framework to govern social, economic and political relations between the Africa, Caribbean, Pacific (ACP) grouping and the European Union (EU). At the centre of the partnership are objectives relating to economic development, the reduction and eventual eradication of poverty, and the smooth and gradual integration of ACP States into the world economy. In order to accomplish these objectives, the Cotonou Agreement provides for the conclusion between the ACP and the EU of “new World Trade Organization (WTO) compatible trading arrangements, removing progressively barriers to trade between them and enhancing cooperation in all areas relevant to trade” (Article 36.1). The conclusion of economic partnership agreements (EPAs) represented one way to achieve a WTO compatible instrument and had to be negotiated during the period starting from September 2002 until 31 December 2007 to replace the trade provisions of the Cotonou Agreement. After three and half years of negotiations, CARIFORUM and the European Commission (EC) finally concluded a comprehensive EPA with the EC on 16 December 2007 when an Agreement was initialed. The EPA Parties agreed to sign it later after a review of the provisions at both the national and regional levels. In CARIFORUM, various comments have been made from governments, Nongovernmental organizations (NGOs), the private sector and the labour movement about the strengths and weaknesses of the EPA. This review comes in this context and is confined to the development cooperation provisions and the question of WTO compatibility and consistency with the Doha Development Agenda (DDA) negotiations and existing WTO provisions on special and differential treatment.

The United States subprime mortgage crisis and its implications for the Caribbean

The bursting of the property bubble – subprime mortgage crisis – in 2007 in the United States has engendered panic, recession fears and turmoil in the global financial system. Although the United States economy grew by 0.6 per cent in the last quarter of 2007, down from 4.9 per cent in the previous quarter, day by day worsening scenarios emerge, from escalating oil prices, to a depreciating dollar and financial institutions’ bailout by the Federal Reserve. Many economists and policy makers share the view that a subprime-led recession – i.e. two consecutive quarters with negative growth – is inevitable and will be much deeper and longer than the 2001 dot-com downturn. Moreover, the critical situation of the financial system has driven some analysts to argue that should the monetary policy response fails to restore confidence among investors, the outcome would be the worst crisis seen since the Great Depression. This pessimism is not only among specialists. Indeed, in late March 2008 the Consumer Confidence Index in the United States recorded its lowest level since February 1992. A recession in the United States will undoubtedly have an important impact on the world economy, despite the continuous rapid growth experienced by emerging economies, particularly China and India. The purpose of this article is threefold: first, to characterize the current situation in the United States economy; second, to discuss the economic policy responses; and finally, to elaborate on how Caribbean economies may be affected.

The new digital revolution: From the consumer Internet to the industrial Internet

The new digital technologies have led to widespread use of cloud computing, recognition of the potential of big data analytics, and significant progress in aspects of the Internet of Things, such as home automation, smart cities and grids and digital manufacturing. In addition to closing gaps in respect of the basic necessities of access and usage, now the conditions must be established for using the new platforms and finding ways to participate actively in the creation of content and even new applications and platforms. This message runs through the three chapters of this book. Chapter I presents the main features of the digital revolution, emphasizing that today’s world economy is a digital economy. Chapter II examines the region’s strengths and weaknesses with respect to digital access and consumption. Chapter III reviews the main policy debates and urges countries to take a more proactive approach towards, for example, regulation, network neutrality and combating cybercrime. The conclusion highlights two crucial elements: first, the need to take steps towards a single regional digital market that can compete in a world of global platforms by tapping the benefits of economies of scale and developing network economies; and second, the significance of the next stage of the digital agenda for Latin America and the Caribbean (eLAC2018), which will embody the latest updates to a cooperation strategy that has been in place for over a decade.

International technological dynamics in production sectors: An empirical analysis

A new methodology is proposed for evaluating the economic development opportunities associated with the different industries making up a country’s economic structure. To this end, neo-Schumpeterian concepts are used to reinterpret the tools afforded by the “product space” literature in an attempt to assess the technological pervasiveness and sophistication of different production sectors. The ultimate objective is to develop a description of today’s techno-productive paradigm and the differential role that the various sectors play in it. An analysis of export data from 113 countries and territories for 2005-2009 indicates that the key sectors in the world economy are: industrial machinery, scientific and medical instruments, and pharmaceuticals. The strong performance of sectors based on mature technologies suggests that key sectors originating in different stages in history can survive and overlap one another, much like geological strata, owing to the persistence of older technological systems.

The People’s Republic of China and Latin America: the impact of Chinese economic growth on Latin American exports

The role of the People’s Republic of China in the world economy has grown substantially in recent decades, turning it into a strategic foreign trading partner for much of Latin America. Bilateral trade between the region and China totalled US$ 120 billion in 2009. This study analyses the income elasticity of the region’s exports to the country. The findings show that, assuming real gross domestic product (gdp) growth in China of about 7% a year, the value of Latin American exports to China (at 2005 prices) can be expected to increase by an average of about 10% a year between 2014 and 2019. In a more conservative scenario of 4.5% average annual growth in the Chinese economy over the period, exports would rise by about 7% a year.

Horizons 2030: Equality at the centre of sustainable development. Summary

The world is living a change of era. The 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals represent the international community’s response to the economic, distributive and environmental imbalances built up under the prevailing development pattern. This document, presented by the Economic Commission for Latin America and the Caribbean (ECLAC) to its member States at its thirty-sixth session, provides an analytical complement to the 2030 Agenda from a structuralist perspective and from the point of view of the Latin American and Caribbean countries. The proposals made here stem from the need to achieve progressive structural change in order to incorporate more knowledge into production, ensure social inclusion and combat the negative impacts of climate change. The reflections and proposals for advancing towards a new development pattern are geared to achieving equality and environmental sustainability. In these proposals, the creation of global and regional public goods and the corresponding domestic policies form the core for expanding the structuralist tradition towards a global Keynesianism and a development strategy centred around an environmental big push.

Horizons 2030: Equality at the centre of sustainable development

The world is living a change of era. The 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals represent the international community’s response to the economic, distributive and environmental imbalances built up under the prevailing development pattern. This document, presented by the Economic Commission for Latin America and the Caribbean (ECLAC) to its member States at its thirty-sixth session, provides an analytical complement to the 2030 Agenda from a structuralist perspective and from the point of view of the Latin American and Caribbean countries. The proposals made here stem from the need to achieve progressive structural change in order to incorporate more knowledge into production, ensure social inclusion and combat the negative impacts of climate change. The reflections and proposals for advancing towards a new development pattern are geared to achieving equality and environmental sustainability. In these proposals, the creation of global and regional public goods and the corresponding domestic policies form the core for expanding the structuralist tradition towards a global Keynesianism and a development strategy centred around an environmental big push.