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Crisis in Latin America : infrastructure investment, employment and the expectations of stimulus
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Abstract
Infrastructure investment is a central part of the stimulus plans of the Latin American and the Caribbean (LAC) region as it confronts the growing financial crisis. This paper estimates the potential effects on direct, indirect, and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable - averaging around 40,000 annual jobs per US1billioninLAC,dependinguponsuchvariablesasthemixofsubsectorsintheinvestmentprogram;thetechnologiesdeployed;localwagesforskilledandunskilledlabor;andthedegreesofleakagestoimportedinputs.Whilethesenumbersdonotaccountforsubstitutioneffect,theyarebuiltaroundanassumed"basket"ofinvestmentsthatcrossesinfrastructuresectorsmostofwhicharenotemployment−maximizing.Albeitlimitedinscope,ruralroadmaintenanceprojectsmayemploy200,000to500,000annualizeddirectjobsforeveryUS1billion spent. The paper also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability, and corruption.Transport Economics Policy&Planning,,Banks&Banking Reform,Non Bank Financial Institutions,Debt Markets