Per Capita GDP Convergence in South America, 1960-2007

Resumen: Este artículo analiza la convergencia de la producción per cápita y los patrones de especialización en Sur América. Este estudio encuentra evidencia a favor de divergencia en la producción, sin embargo, también halla que diferencia en los patrones de especialización y producción no son, necesariamente, la causa. Por último y aunque más investigación es necesaria, este artículo sugiere que la integración regional y la geografía pueden tener un papel fundamental en explicar la convergencia de la producción.Club de convergencia, comercio, convergencia, geografía económica,producción per cápita, Sur América

Spatial effects on technical progress: growth, and convergence among countries

This paper analyses how several spatial variables coming from cities and transportation system can affect money market, specially the income velocity of circulation, assuming an unit-elastic aggregate demand function and considering money velocity as a variable. Fluctuations in velocity caused by some spatial variables, under certain conditions, can affect the aggregate demand curve. The specification of the main relation-ship has found in the Baumol-Tobin model for transaction money demand, and in Christaller-Lösch central place theory. The estimation of the model has been based on panel data techniques and applied across 61 countries during 14 years in the 1978-1991 period. Theoretical and econometric results indicates that seven spatial variables like the country’s first city population, the population density, the passengers-kilometer transported by railways, and several ratios referred to some geographical variables, can provokes fluctuations on aggregate demand curve in the short run. In the long run, the aggregate supply can be also affected by means of these variables. In order to checking this question, considering that these spatial variables are not product factor, we propose to observe if these variables can affect the technological progress coefficient, A, concerning to an aggregate production function, according to a neo-classical growth model. Results by means of the Mankiw, Romer and Weil method, and also by means of an endogenous growth model of technology diffusion, indicates that some spatial variables affect the speed of convergence relative to the real per head income, across these 61 countries. However, a certain amount in some of these variables generates a congestion process in some countries. For checking it, we utilize a Barro and Sala i Martin endogenous growth model which reflects government activities. The concluding remarks indicates that some of these spatial variables above mentioned increases the speed of convergence but generates congestion in some countries. These spatial variables also affect the aggregate supply, and hence the price and output levels. Key words: transportation, regional growth, convergence, congestion. JEL Class.: R41

Spatial Decomposition of Inequality

inequality, index, decomposition

Fiscal sustainability and fiscal shocks in a dollarized and oil-exporting country: Ecuador

This paper investigates the fiscal sustainability of an emerging, dollarized, oil-exporting country: Ecuador. A cointegrated VAR approach is adopted in testing, first, if the intertemporal budget constraint is satisfied in Ecuador and, second, in identifying the permanent and transitory shocks that affect a fiscal policy characterized by inertia and a heavy dependence on oil revenues. Following confirmation that the debt-GDP ratio does not place the Ecuadorian budget under any pressure, we reformulate the model and identify two forces that push the fiscal system out of equilibrium, namely, economic activity and oil revenues implemented in the government budget. We argue that Ecuador needs to recover control of its monetary policy and to promote the diversification of its economy in order that non-oil tax revenues can replace oil revenues as a pushing force. Finally, we calculate quarterly elasticities of tax revenues with respect to Ecuador’s GDP and that of eight Eurozone countries. We illustrate graphically how the Eurozone countries with low positive or high negative elasticities’ levels suffer debt problems after the crisis. This finding emphasizes the pressing need for Ecuador to strengthen the connection between its tax revenues and output, and also suggests that the convergence of these elasticities in the Eurozone might contribute to the success of an eventually future fiscal union

Spatial Dependence and Economic Growth: Evidence from a panel of Countries

The empirical literature about economic growth has usually ignored spatial interdependence among countries. This paper uses spatial econometrics to estimates a growth model that includes cross-country interdependence, in whitch a country's economic growth depends on the growth rate of its neighbords. Based on a sample of 98 countries over three decades (1965-75,1975-85, 1985-95) we find that espatial relationschip across countries are quite relevant. A country's economic growt is indeed affected by the perfomance of its neighbors and then influenced by its own geographical position. This results suggests that the spillover effects among countries are important for growth.Our results indicate that spatial interrelation can not be ignored in the analysis of economic growth. Ignoring such relationships can result in model misspecification.Spatial economterics, economic growth, interdependence.

Per capita GDP convergence in South America, 1960-2007

RESUMEN: Este artículo analiza la convergencia de la producción per cápita y los patrones de especialización en Sur América. Este estudio encuentra evidencia a favor de divergencia en la producción, sin embargo, también halla que diferencia en los patrones de especialización y producción no son, necesariamente, la causa. Por último y aunque más investigación es necesaria, este artículo sugiere que la integración regional y la geografía pueden tener un papel fundamental en explicar la convergencia de la producción.ABSTARCT: This paper analyzes output per capita convergence in South America and production specialization patterns. This study finds evidence of output divergence; however, it also finds that structural output differences and patterns of specialization of production are not necessarily the cause. Finally, this paper suggests that geography and regional integration may play a pivotal role in explaining convergence of output, although more research is required

Does Geography Explain Differences in Economic Growth in Peru?

In Peru, a country with an astonishing variety of different ecological areas, including 84 different climate zones and landscapes, with rainforests, high mountain ranges and dry deserts, the geographical context may not be all that matters, but it could be very significant in explaining regional variations in income and welfare. The major question this paper tries to answer is: what role do geographic variables, both natural and manmade, play in explaining per capita expenditure differentials across regions within Peru? How have these influences changed over time, through what channels have they been transmitted, and has access to private and public assets compensated for the effects of an adverse geography? We have shown that what seem to be sizable geographic differences in living standards in Peru can be almost fully explained when one takes into account the spatial concentration of households with readily observable non-geographic characteristics, in particular public and private assets. In other words, the same observationally equivalent household has a similar expenditure level in one place as another with different geographic characteristics such as altitude or temperature. This does not mean, however that geography is not important but that its influence on expenditure level and growth differential comes about through a spatially uneven provision of public infrastructure. Furthermore, when we measured the expected gain (or loss) in consumption from living in one geographic region (i. e. , coast) as opposed to living in another (i. e. , highlands), we found that most of the difference in log per-capita expenditure between the highland and the coast can be accounted for by the differences in infrastructure endowments and private assets. This could be an indication that the availability of infrastructure could be limited by the geography and therefore the more adverse geographic regions are the ones with less access to public infrastructure. It is important to note that there appear to be non-geographic, spatially correlated, omitted variables that need to be taken into account in our expenditure growth model. Therefore policy programs that use regional targeting do have a rationale even if geographic variables do not explain the bulk of the difference in regional growth, once we have taken into account differentials in access to private and public assets.

Los vínculos entre aglomeración y crecimiento: un estudio para Argentina

This paper analyses the influence of agglomeration on economic growth in the Argentinian provinces for the period 1981–2007 using fixed effects and GMM estimation for panel data. The choice of the estimation approach is crucial. After controlling for potential simultaneity bias, there is evidence of a link between agglomeration and growth in the Argentinian provinces, suggesting that the "Williamson hypothesis" is in place.El trabajo analiza el efecto de la aglomeración sobre el crecimiento económico en las provincias argentinas para el período 1981-2007 utilizando estimaciones de efectos fijos y de GMM dinámico. La elección del enfoque de estimación es crucial. La utilización de GMM para reducir el sesgo de simultaneidad permite observar una relación entre aglomeración y crecimiento en las provincias argentinas que sugiere que la "Hipótesis de Williamson" está vigente

"Agglomeration, Inequality and Economic Growth"

The impact of income inequality on economic growth is dependent on several factors, including the time horizon considered, the initial level of income and its initial distribution. Yet, as growth and inequality are also uneven across space, it is also pertinent to consider the effects of the geographical agglomeration of economic activity. Moreover, it would also seem pertinent to consider not just the levels of inequality and agglomeration, but also the changes they undergo (i.e., their within-country evolution) and how these two processes interact with each other. By applying different econometric specifications and by introducing different measures of agglomeration at country level (specifically, urbanization and urban concentration rates), this study analyzes how inequality and agglomeration (both their levels and their evolution) influence economic growth in function of the country’s level of development and its initial income distribution. Our results suggest, in line with previous studies, that while high inequality levels are a limiting factor for long-run growth, increasing inequality and increasing agglomeration have the potential to enhance growth in low-income countries where income distribution remains relatively equal, but can result in congestion diseconomies in high-income countries, especially if income distribution becomes particularly unequal.Agglomeration, urbanization, urban concentration, congestion diseconomies, inequality, growth JEL classification:O1, O4, R1

Bargaining Coalitions in the Agricultural Negotiations of the Doha Round: Similarity of Interests or Strategic Choices? An Empirical Assessment

The paper aims at understanding the structural features of the bargaining coalitions in the Doha Round of the WTO. We provide an empirical assessment of the preferences of each negotiating actor looking at general economics indicators, development levels, structure of the agricultural sectors, and trade policies for agricultural products. Bargaining coalitions are analyzed by grouping countries through a cluster analysis procedure. The clusters are compared with existing coalitions, in order to assess their degree of internal homogeneity as well as their common interests. Such a comparison allows the detection of possible “defectors”, i.e. countries that according to their economic conditions and policies seem to be relatively less committed to the positions of the coalition they join.Agricultural trade negotiations, Bargaining coalitions, WTO, Cluster analysis