Development

Matias Busso, Julian Cristia, Diana Hincapié, Julián Messina, Laura Ripani, 16 October 2017

Skills-development policies are needed in Latin America and the Caribbean to close the region’s productivity gap with the rest of the world, and at the same time help close the gap between those who began life with and without advantages or opportunities. This column presents the new IADB flagship report, which aims to help governments address these issues by providing detailed, evidence-based analysis of what works and what doesn’t.

Alejandro Cuñat, Robert Zymek, 15 October 2017

A large portion of international income differences remains poorly understood. It is traditionally attributed to cross-country differences in total factor productivity, which cannot be measured directly. This column argues that the importance of total factor productivity has been overstated because differences in countries’ patterns of international linkages have been overlooked. Using input-output data for 40 countries, it shows how the assumption that economies are closed has led traditional development accounting to overestimate total factor productivity.

Francisco Costa, Jason Garred, João Pessoa, 24 September 2017

In addition to being a competitor for other countries’ industries, China has also become an increasingly important consumer of goods produced elsewhere. This column looks at how the steep rise in ‘commodities-for-manufactures’ trade with China has affected workers in Brazil. While the analysis confirms a negative effect of Chinese import competition on employees of manufacturing firms, it also suggests that growth in trade with China has created some winners in Brazil, with wages rising more quickly in parts of the country benefiting more from increasing Chinese demand.

Daniel Aaronson, Rajeev Dehejia, Andrew Jordan, Cristian Pop-Eleches , Cyrus Samii, Karl Schulze, 15 September 2017

Women’s fertility and labour supply decisions are made simultaneously, making it difficult to identify the effect of the former on the latter. This column explores the relationship using a dataset spanning 200 years and 103 countries, leveraging twin births to isolate causal effects. The key finding is that as countries develop, women’s labour supply becomes more responsive to additional children. The global decline in fertility over the last century has played a positive role in increasing women’s work in developed countries, but a negligible one in developing countries.

Bernard Hoekman, Anirudh Shingal, 13 September 2017

Research on the effects of Aid for Trade has focused mostly on merchandise trade and investment in developing countries. This column discusses the relationship between Aid for Trade and trade in services and finds that while most Aid for Trade is allocated to service sectors, this is not associated with greater trade in services, in contrast to what is observed for trade in goods. These findings suggest that Aid for Trade could do more to target capacity weaknesses that constrain growth in services trade.

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