The Effects of Infrastructure Development on Growth and Income Distribution

This paper provides an empirical evaluation of the impact of infrastructure development on economic growth and income distribution using a large panel data set encompassing over 100 countries and spanning the years 1960-2000. The empirical strategy involves the estimation of simple equations for GDP growth and conventional inequality measures, augmented to include among the regressors infrastructure quantity and quality indicators in addition to standard controls. To account for the potential endogeneity of infrastructure (as well as that of other regressors), we use a variety of GMM estimators based on both internal and external instruments, and report results using both disaggregated and synthetic measures of infrastructure quantity and quality. The two robust results are: (i) growth is positively affected by the stock of infrastructure assets, and (ii) income inequality declines with higher infrastructure quantity and quality. A variety of specification tests suggest that these results do capture the causal impact of the exogenous component of infrastructure quantity and quality on growth and inequality. These two results combined suggest that infrastructure development can be highly effective to combat poverty. Furthermore, illustrative simulations for Latin American countries suggest that these impacts are economically quite significant, and highlight the growth acceleration and inequality reduction that would result from increased availability and quality of infrastructure.Infrastructure, Growth, Income Inequality

Trends in Infrastructure in Latin America, 1980-2001

There is widespread concern across Latin America that the provision of infrastructure services has suffered as a consequence of the retrenchment of the public sector and the insufficient response of the private sector to the opening up of infrastructure industries to private participation in most countries. This paper documents the recent trends in infrastructure stocks and infrastructure investment in major Latin American economies. Using an updated dataset constructed for this task, the paper describes the evolution of the quantity and quality of infrastructure assets – power, transport, telecommunications– as well as the investment expenditures of the public and private sectors. The paper finds that Latin America lags behind the international norm in terms of infrastructure quantity and quality, and there is little evidence that the gap may be closing – except in the telecommunications sector. Furthermore, overall infrastructure investment has fallen, as a combined result of the retrenchment of public investment and the limited response of the private sector, which has been mostly confined to the telecommunications industry. However, there is considerable disparity across countries. On the whole the data show that the countries most successful in attracting large volumes of private investment (Chile, Colombia, Bolivia) are precisely those where public investment has remained high.

The Complexity of Corruption: Nature and Ethical Suggestions

Corruption is a well-established research topic which increasingly attracts interest, as attested by a growing body of literature. Nevertheless, disagreements persist not only about how to curve it, but even about its definition, causes and consequences. Such a lack of consensus reflects the complexity of the problem, a feature which is often cited but rarely analyzed. This paper aims to fill that gap. In particular, we first address the nature of corruption’s complexity by offering and analyzing an inventory of “generators of complexity” compiled from the available literature. Secondly, our paper draws from the key conclusions of that analysis to shed some light on the complex role played by corporations on corruption. Finally, we suggest that ethical aspects have to be considered in order to clarify many complex dilemmas around corruption and illuminate the corporate role in both domestic and foreign business activity.

How Did Latin America’s Infrastructure Fare in the era of Macroeconomic Crises?

There is a long-standing literature that shows that fiscal adjustment is often implemented through cuts in public investment, including infrastructure (Roubini and Sachs, 1989; Hicks, 1991; De Haan et al. 1996). In this respect, the present paper aims to provide a comprehensive overview of the evolution of infrastructure stocks, quality and spending in Latin America in order to assess whether the infrastructure sector suffer from the prolonged period of macroeconomic stabilization in the 1980s and 1990s. First, we assess trends in quantity and quality of infrastructure using data on 19 Latin American countries, and we compare them to the performance of the seven "East Asian miracle" countries. Second, we look at trends in infrastructure spending for 9 major Latin American countries on which we have country data. Here we examine to what extent changes in public infrastructure spending were linked to fiscal deficit reductions and driven by the privatization of infrastructure and increased private spending on infrastructure. Finally, we assess the relationship of infrastructure quantity and quality to the path of infrastructure spending in a panel data econometric analysis.

Greenfield Fdi vs. Mergers and Acquisitions: Does the Distinction Matter?

FDI flows to developing countries surged in the 1990s, to become their leading source of external financing. This rise in FDI volume was accompanied by a marked change in its composition: investment taking the form of acquisition of existing assets (M&A) grew much more rapidly than investment in mainly new assets (‘greenfield’ FDI), particularly in countries undertaking extensive privatization of public enterprises. This raises two issues. First, is the M&A boom a one-time effect of privatization, or is it likely to be followed by a rise in greenfield investment? Second, do these two types of FDI have different macroeconomic consequences – in terms of aggregate investment and growth? This paper focuses on establishing the stylized facts in terms of time precedence between both types of FDI, investment and growth using data for a large sample of industrial and developing countries. We find that in developing and industrial countries higher M&A is typically followed by higher greenfield investment, while the reverse is true only for industrial countries. In developing economies domestic investment leads both types of FDI, but not the reverse; while in industrial countries, domestic investment leads M&A FDI but is led by greenfield FDI. Neither type of FDI appears to precede economic growth in either developing or industrial countries, but FDI does respond positively to increases in the growth rate.

Infrastructure Compression and Public Sector Solvency in Latin America

Public investment and infrastructure spending are often singled out for drastic cuts at times of fiscal retrenchment. Fiscal austerity in Latin America during the 1980s and 1990s was characterized by a sharp contraction in infrastructure spending. In 5 of the 9 major Latin American countries, infrastructure investment cuts contributed half or more of the total fiscal adjustment. However, the compression of infrastructure spending does not guarantee the sustainability of the public sector. Infrastructure spending cuts not only reduce the public deficit (thereby raising the public sector’s net worth) but also leads to a decline in infrastructure stock accumulation and in output growth as well. This in turn implies a reduction in the economy’s debt-servicing capacity, thus weakening the public sector net worth (Easterly, 2001). In the present paper we quantitatively assess the growth cost of public infrastructure compression for major Latin American economies during the fiscal austerity period of the 1980s and 1990s, and examine the effectiveness of infrastructure spending cuts as a device to enhance public sector solvency.

Operators with dense images everywhere

In this paper, the authors introduce the dense-image operators T as those with a wild behaviour near of the boundary of a domain G, via certain subsets. The relationship with other kinds of operators with wild behaviour is studied, proving that the new concept generalizes the earlier of omnipresent, but there is no good relationship with the strongly omnipresent operators. We obtain, among other results, that the following kinds of operators are dense-image: onto linear operators; operators with local dense range satisfying soft conditions; Volterra complex integral operators plus infinite order differential operators, multiplication operators. In addition, holomorphic selfmappings and entire functions generating dense-image right or left composition operators are completely characterized.Dirección General de Enseñanza Superior (DGES). EspañaJunta de Andalucí

Monsters in Hardy and Bergman spaces

A monster in the sense of Luh is a holomorphic function on a simply connected domain in the complex plane such that it and all its derivatives and antiderivatives exhibit an extremely wild behaviour near the boundary. In this paper the Hardy spaces Hp and the Bergman spaces Bp (1 ≤ p < ∞) on the unit disk are considered, and it is shown that there are no Luh-monsters in them. Nevertheless, it is proved that T-monsters (as introduced by the authors in an earlier work) can be found in each of these spaces for any finite order linear differential operator T.Plan Andaluz de Investigación (Junta de Andalucía

A Seidel-Walsh theorem with linear differential operators

Assume that {Sn}∞1 is a sequence of automorphisms of the open unit disk D and that {Tn}∞1 is a sequence of linear differential operators with constant coefficients, both of them satisfying suitable conditions. We prove that for certain spaces X of holomorphic functions in the open unit disk, the set of functions f ∈ X such that {(Tnf) ◦ Sn : n ∈ N} is dense in H(D) is residual in X. This extends the Seidel-Walsh theorem together with some subsequent results.Dirección General de Enseñanza Superior (DGES). EspañaJunta de Andalucí

Large algebras of singular functions vanishing on prescribed sets

In this paper, the non-vacuousness of the family of all nowhere analytic infinitely differentiable functions on the real line vanishing on a prescribed set Z is characterized in terms of Z. In this case, large algebraic structures are found inside such family. The results obtained complete or extend a number of previous ones by several authors.Comment: 11 page