Capital flows to Latin America: fourth quarter 2003

Includes bibliography

Capital flows to Latin America: third quarter 2004

Includes bibliography

Capital flows to Latin America: recent developments

Includes bibliography

Capital flows to Latin America: recent developments

The external environment has deteriorated sharply as a result of the spiraling financial turmoil, and has led to a weakening in commodity prices and fears of a worldwide recession. Latin America and the Caribbean's fastest expansion in 40 years may be threatened as the global credit crunch makes financing scarce and squeezes demand for the region's commodities. This time around the region is better positioned to weather the crisis than in the past, given improvements in macroeconomic and financial policies as well as a reduced net dependency on external capital inflows. However, Latin American markets are feeling the effects of the crisis through a slowdown in capital inflows, large declines in stock price indexes, significant currency adjustments and an increase in debt spreads. Volatility has soared, with the closely watched Chicago Board Options Exchange Volatility Index moving to an all-time high of 70.33 on October 17, indicating that fear (rather than greed) has been ruling the markets.After reaching record lows in May 2007, emerging markets bond spreads are now above pre-Asian crisis levels. The JPMorgan EMBI+ Latin American composite widened by 146 basis points in the third quarter, with spreads reaching 448 basis points at the end of September. Spreads have widened sharply in recent weeks as foreign investors cut back regional exposure for the safety of U.S. Treasuries. The ongoing lack of liquidity and subsequent liquidation of assets is leading to a collapse in asset prices and a sharp widening in spreads. Daily spreads in October have risen to levels not seen since December 2002, making it much more difficult for governments that need financing to get it. Risk premiums for Latin corporates and sovereigns have risen substantially, but have remained well below U.S. junk (high-yield) bonds. Latin corporates are facing a steep rise in foreign exchange borrowing costs (although less than firms in other emerging markets), which raises concerns that refinancing risks will climb.So far, emerging markets vulnerabilities have been more focused on corporates, as sovereigns have improved public debt dynamics and countries' financing needs are under control. Market performance has been driven by the rapid deterioration of emerging markets bank and corporate market, as well as ongoing losses in emerging markets equities. From January to September 2008, the Morgan Stanley Capital International (MSCI) Latin American Index lost almost 28%, while the Emerging Markets Index lost 37% and the G-7 Index lost 24%. While in 2007 the Latin America component gained 47%, almost nine times as much as the MSCI-G7 index for developed markets, since mid-September 2008 stocks in Latin America have been doing worse than stocks in developed countries, as concerns about access to credit and the adverse impact of sharp falls in commodity prices and in local currencies contribute to increased risk aversion and to outflows of capital. Many governments in the region have used revenue from the commodity boom to pay down debt and build reserves. Now, facing a global financial crisis and the threat of recession in developed countries, the biggest question for Latin America is how long and deep this cyclical downturn will be, and how much it is going to reduce commodity prices. Prices for commodities such as soy, gold, copper and oil, which helped fund the region's boom, have fallen 28% since their July 2 high, according to the RJ/CRB Commodity Price Index. According to Morgan Stanley (in a September 29 report), should prices return to their 10-year average, Latin America's balanced budgets would quickly revert to a deficit of 4.1% of GDP. As risk aversion increases, investors are rapidly pulling out massive amounts of money, creating problems for local markets and banks. There is an ongoing shortage of dollars (as investors liquidate assets in Latin American markets), and as currencies depreciate, inflation concerns increase despite the global slowdown. In Brazil and Mexico, central banks deployed billions of dollars of reserves to stem steep currency declines, as companies in these countries, believing their local currencies would continue to strengthen against the U.S. dollar, took debts in dollars. Some companies also made bets using currency derivatives that have led to losses in the billions of dollars. Dramatic currency swings have caused heavy losses for many companies, from Mexico's cement giant Cemex SAB to the Brazilian conglomerate Grupo Votorantim. Mexico's third-largest retailer, Controladora Comercial Mexicana, declared bankruptcy recently after reporting huge losses related to exchange rate bets. As concerns about corporate exposure to dollar-denominated derivatives increases, yields on bonds issued by many of Brazil's and Mexico's leading companies have started to rise, sharply raising the cost of issuing new debt. Latin American external debt issuance came to a halt in the third quarter of 2008, totaling only US$ 690 million. The cost of obtaining loans for capital expenditures, M&A and debt refinancing is also rising substantially for Latin American corporates amid contagion from the U.S. financial crisis. According to bankers, a protracted trend of shortening tenors and widening spreads has intensified in the past few weeks, indicating that bank lending is quickly following the way of bonds and equity. Finally, money transfers from Latin American migrants are expected to decline for the first time this decade, as a result of economic downturns in the U.S. and Spain, inflation and a weaker dollar. The Mexican Central Bank announced that money transfers from Mexicans living in the U.S. dropped a record 12.2% in August. In 2008, migrants from the region will send some 1.7% less in remittances year-on-year when adjusted for inflation, according to the IADB, compounding the adverse effects of the deepening financial turmoil.

Terms of trade and output fluctuations in Colombia

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.

Capital Flows to Latin America and the Caribbean: 2014 Overview

Divergence in macro trends and in monetary policy in advanced economies was a dominant driver of rates and currencies in emerging markets in 2014. Diverging macroeconomic developments were reflected in different monetary policy actions in 2014, with the European Central Bank (ECB) and the Bank of Japan (BOJ) moving in the opposite direction of the U.S. Federal Reserve. The unwinding of the U.S. monetary stimulus, while the ECB and the BOJ step up their monetary stimulus, has underpinned an appreciation by the U.S. dollar, in which most commodities are priced. Latin American markets, which started the year under pressure from fears of the U.S. Federal Reserve tapering off its quantitative easing program and concerns over stability, ended 2014 under pressure from a stronger U.S. dollar. However, there are many signs that a slowdown in LAC financial markets – particularly debt markets, which have been breaking records in debt issuance for the past six years – is under way. The region’s growth prospects look somewhat 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.

A first approach to the impact of the real exchange rate on industrial sectors in Colombia

Much has been said about possible symptoms of Dutch disease in Colombia in the wake of a marked upsurge in commodity prices and the significant real appreciation of the national currency. This paper examines whether the real effective exchange rate had an impact on industry during the period 2000-2010. Specifically, it evaluates the effect of the appreciation of the real exchange rate on the value added of 63 industrial sectors in Colombia using the Arellano and Bond (1991) generalized method of moments (gmm) estimator. Overall, our results confirm a negative relationship between real exchange rate appreciation and industry. The analysis showed that real exchange rate appreciation had a significant impact on the value added of 21 sectors: a negative effect for 18 sectors and a positive effect for 3 sectors.

Hacia una nueva gobernanza de los recursos naturales en América Latina y el Caribe

El desafío del desarrollo en América Latina y el Caribe es trascendental, por las diferentes dimensiones que lo componen, sus objetivos e instrumentos y los obstáculos que lo condicionan. En esa línea, este libro constituye una contribución al debate sobre el desarrollo, en particular sobre uno de sus retos más grandes, la gobernanza de los recursos naturales. En el caso de los recursos naturales no renovables, el desafío de la gobernanza es aún mayor, debido a su propia naturaleza de recursos agotables, que exige un tratamiento en extremo cuidadoso, que atienda a los criterios más apreciados del desarrollo sostenible y que considere las necesidades de las generaciones futuras como un componente esencial de las decisiones. La gobernanza vigente de los recursos naturales no ha logrado llevar a la región a un proceso virtuoso para el aprovechamiento sostenible de esa riqueza. Como se sostiene a lo largo del libro, la región requiere una nueva gobernanza de los recursos naturales que asegure que los beneficios de su explotación sean sostenibles, que haga un aporte concreto al desarrollo pleno y que contribuya a disminuir las desigualdades existentes.

Reprimarização da pauta de exportação e a atual inserção internacional brasileira (2000-2014)

Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq)

Le scelte di investimento delle aziende agricole e la PAC post-2013: valutazione di scenari mediante un modello real options

Negli ultimi decenni la Politica Agricola Comune (PAC) è stata sottoposta a diverse revisioni, più o meno programmate, che ne hanno modificato gli obiettivi operativi e gli strumenti per perseguirli. In letteratura economica agraria sono state eseguite diverse ricerche che affrontano analisi ex-ante sui possibili impatti delle riforme politiche, in particolare al disaccoppiamento, riguardo all’allocazione dei terreni alle diverse colture e all’adozione di tecniche di coltivazione più efficienti. Ma tale argomento, nonostante sia di grande importanza, non è stato finora affrontato come altri temi del mondo agricolo. Le principali lacune si riscontrano infatti nella carenza di analisi ex-ante, di modelli che includano le preferenze e le aspettative degli agricoltori. Questo studio valuta le scelte di investimento in terreno di un’azienda agricola di fronte a possibili scenari PAC post-2013, in condizioni di incertezza circa le specifiche condizioni in cui ciascuno scenario verrebbe a verificarsi. L’obiettivo è di ottenere indicazioni utili in termini di comprensione delle scelte di investimento dell’agricoltore in presenza di incertezza sul futuro. L’elemento maggiormente innovativo della ricerca consiste nell’applicazione di un approccio real options e nell’interazione tra la presenza di diversi scenari sul futuro del settore agricolo post-2013, e la componente di incertezza che incide e gravita su di essi. La metodologia adottata nel seguente lavoro si basa sulla modellizzazione di un’azienda agricola, in cui viene simulato il comportamento dell’azienda agricola in reazione alle riforme della PAC e alla variazione dei prezzi dei prodotti in presenza di incertezza. Mediante un modello di Real Option viene valutata la scelta della tempistica ottimale per investire nell’acquisto di terreno (caratterizzato da incertezza e irreversibilità). Dai risultati emerge come in presenza di incertezza all’agricoltore convenga rimandare la decisione a dopo il 2013 e in base alle maggiori informazioni disponibili eseguire l’investimento solo in presenza di condizioni favorevoli. La variazione dei prezzi dei prodotti influenza le scelte più dell’incertezza dei contributi PAC. Il Real Option sembra interpretare meglio il comportamento dell’agricoltore rispetto all’approccio classico del Net Present Value.

Minería metalífera en Santa Cruz : Empleo y matriz productiva

El presente estudio se propone realizar una caracterización de la minería metalífera en la Provincia de Santa Cruz. Esta actividad comenzó a desarrollarse en esa provincia desde mediados de los años 90 y, hasta la fecha, creció en forma sostenida como consecuencia del cruce de una serie de circunstancias favorables: a) las modificaciones en la legislación, que favorecieron la inversión minera al equiparar en oportunidades a la República Argentina con Chile y el Perú, países con un elevado desarrollo minero gracias a la importante inversión externa directa; b) el potencial minero de la provincia; c) la crisis en el sector lanero -especialmente en la meseta central de la provincia- que llevó a un despoblamiento de los campos de actual explotación minera, lo que redujo la potencial conflictividad entre la minería y la ganadería y facilitó a la nueva actividad la adquisición de propiedades a bajos precios, presentándola, además, como un sector generador de empleo; d) la lejanía de los yacimientos mineros de los centros poblados de la provincia, que favoreció un consenso social superior al verificado en otras regiones del país. En la actualidad, en un contexto de aumento generalizado de los precios internacionales de las commodities, se observa un constante incremento de la actividad minera en la Provincia de Santa Cruz. Ello ha conducido a la incorporación de nuevas tecnologías de producción para la recuperación mineral y a dar impulso a nuevas explotaciones

Minería metalífera en Santa Cruz : Empleo y matriz productiva

El presente estudio se propone realizar una caracterización de la minería metalífera en la Provincia de Santa Cruz. Esta actividad comenzó a desarrollarse en esa provincia desde mediados de los años 90 y, hasta la fecha, creció en forma sostenida como consecuencia del cruce de una serie de circunstancias favorables: a) las modificaciones en la legislación, que favorecieron la inversión minera al equiparar en oportunidades a la República Argentina con Chile y el Perú, países con un elevado desarrollo minero gracias a la importante inversión externa directa; b) el potencial minero de la provincia; c) la crisis en el sector lanero -especialmente en la meseta central de la provincia- que llevó a un despoblamiento de los campos de actual explotación minera, lo que redujo la potencial conflictividad entre la minería y la ganadería y facilitó a la nueva actividad la adquisición de propiedades a bajos precios, presentándola, además, como un sector generador de empleo; d) la lejanía de los yacimientos mineros de los centros poblados de la provincia, que favoreció un consenso social superior al verificado en otras regiones del país. En la actualidad, en un contexto de aumento generalizado de los precios internacionales de las commodities, se observa un constante incremento de la actividad minera en la Provincia de Santa Cruz. Ello ha conducido a la incorporación de nuevas tecnologías de producción para la recuperación mineral y a dar impulso a nuevas explotaciones

Minería metalífera en Santa Cruz : Empleo y matriz productiva

El presente estudio se propone realizar una caracterización de la minería metalífera en la Provincia de Santa Cruz. Esta actividad comenzó a desarrollarse en esa provincia desde mediados de los años 90 y, hasta la fecha, creció en forma sostenida como consecuencia del cruce de una serie de circunstancias favorables: a) las modificaciones en la legislación, que favorecieron la inversión minera al equiparar en oportunidades a la República Argentina con Chile y el Perú, países con un elevado desarrollo minero gracias a la importante inversión externa directa; b) el potencial minero de la provincia; c) la crisis en el sector lanero -especialmente en la meseta central de la provincia- que llevó a un despoblamiento de los campos de actual explotación minera, lo que redujo la potencial conflictividad entre la minería y la ganadería y facilitó a la nueva actividad la adquisición de propiedades a bajos precios, presentándola, además, como un sector generador de empleo; d) la lejanía de los yacimientos mineros de los centros poblados de la provincia, que favoreció un consenso social superior al verificado en otras regiones del país. En la actualidad, en un contexto de aumento generalizado de los precios internacionales de las commodities, se observa un constante incremento de la actividad minera en la Provincia de Santa Cruz. Ello ha conducido a la incorporación de nuevas tecnologías de producción para la recuperación mineral y a dar impulso a nuevas explotaciones