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Employment in the industrial sector has decreased in all advanced countries, even though the sector's share in the gross domestic product (gdp) has not changed or has decreased only slightly in many cases, mostly because of improvements in labour productivity. Simultaneously, services have not stopped growing, reaching a share in developed economies of around 75%, sometimes higher, both in employment and contribution to nominal gdp. These processes have been the subject of extensive literature developed on the concepts of "deindustrialization" and "tertiarization", and on their possible explanations. Though delayed, these two far-reaching trends have taken, or are taking place, also in countries classified as middle-income or developing countries, giving rise to the concept of "premature deindustrialization". Various explanations have emerged around these issues, all of which have qualified the two major trends as worrisome. A common explanation suggests an industry-services contrast, where the trade-off between them appears as "the villain of the story"--borrowing an expression from the traditional theatre. This paper aims to show that this view is oversimplifying and wrong. What is observed in almost all economies is a process of growing integration between the two sectors, instead of a confrontation between them, and everything indicates that they will only integrate further in the coming years. The characteristics of such integration will be analyzed in the paper as well. [ABSTRACT FROM AUTHOR]

This paper analyzes debt securitization in underdeveloped countries, using the case of Argentina, Mexico, and Brazil. We argue that the three countries have had a significant increase in the issuance of debt securities. However, the nature of the securities issued is different in each nation. In the case of Argentina, the increase in international debt securities in circulation has to do with the issuance of government securities. In Mexico, the increase is more related to the new financing needs of Mexican non-financial corporations. While in Brazil, the increase in the issuance of debt securities is due to a combination of both factors. [ABSTRACT FROM AUTHOR]

The paper draws macroeconomic policy lessons by contrasting the developing countries experience in the 2000s -including their performance in the recent global crisis- with the previous three decades of financial globalization. The main lesson is the crucial role of macroeconomic policies in fostering growth, preserving financial stability and generating a robust performance vis-à-vis real and financial external shocks. In addition, the analysis suggests a set of policy orientations that contribute to the simultaneous achievement of the three mentioned objectives. The paper is presented in two parts. The first part presents the analysis that provides the foundations of the main lesson and the mentioned macroeconomic policy orientations. The second presents a synthetic formulation of the macroeconomic policies and discusses different aspects of their instrumentation, focusing particularly on the exchange rate and monetary policies. Concluding remarks are presented in the last section. [ABSTRACT FROM AUTHOR]

After years of effective functioning, the intermediate exchange rate systems ended up becoming prone to suffering speculative attacks, as the process of financial integration advanced. The empirical evidence collected in this paper endorses the fact that the less strict pegged exchange rate systems, that is soft pegs, were the epicentre of the most of exchange rate crises during '90's in Europe, Latin America and Eastern Asia. Consequently, intermediate systems and, especially soft pegs, have lost credit to the benefit of more extreme systems of exchange rate spectrum. This paper contributes new evidence on the tendency toward the bipolarization of the exchange rate systems and studies their evolution between 1990 and 2004, both in the advanced economies and in the emerging economies most integrated in the international capital markets. [ABSTRACT FROM AUTHOR]

This paper examines the impact on total factor productivity (TFP) in Latin America and the Caribbean (LAC) and in other developing countries of trade-related technology diffusion from the North (denoted by NRD), education, and governance. The NRD of developing countries is defined as a weighted sum of R&D stocks in the North, with weights related to openness with the North's trading partners. Industryspecific NRD is based on the North's industry-specific R&D stocks, North-South trade patterns, and input-output relations in the South. The main findings are that: i) the impact of education and governance on TFP is significantly larger in LAC than in other developing countries, while the opposite holds for NRD; ii) education, governance and NRD have additional effects on TFP in LAC's R&D-intensive industries through their interaction with the other two variables; and iii) since NRD increases with openness to the North and with the North's R&D stocks, both variables raise the South's TFP directly as well as through interaction with education and governance. These interaction effects imply that increasing the level of any of the three policy variables — education, governance or openness — results in virtuous growth cycles. These are smallest for an increase in one of these variables, stronger for an increase in two of them, and strongest for an increase in all three variables. [ABSTRACT FROM AUTHOR]

Few ideas and activities have received as hyperbolic praise as that presented by Hernando de Soto on informality. Nobel laureates in economics, presidents of various countries, important magazines, and multilateral organizations have endorsed this author's impulse towards the official registration of the property or the poor, particularly, their homes, as the key to launching a worldwide economic revolution from below. In this paper we present the institutional backing of those ideas, the analytic substance behind the main arguments involved, the descriptive accuracy of the institutions operating in the Third World, and the results of their application. In this way, we evaluate the relationship between the spread and power of an idea and its formal content, and its effectiveness in changing the world of the poor. [ABSTRACT FROM AUTHOR]

Chile has pioneered the implementation of emission offseting programs pursuing simultaneously economic growth and environmental protection. In this paper, emission trading programs implemented in Santiago of Chile are analyzed and its relevance for developing countries is evaluated. It is argued that emission trading programs can be the best tool to deal with air pollution problems even in cases in which the institutional capacities are not well developed. Moreover, the inclusion of the transport system into the emission trading programs and the possibility of moving towards a system of interpollutant exchange are both nouvelle and relevant elements in the context of air pollution control policies. However, these innovations involve rather more complex elements in the design of emission trading programs. [ABSTRACT FROM AUTHOR]

This paper examines the impact of trade with Japan, North America and the EU on technology diffusion and TFP growth in Jordan, Korea and Mexico. The measures of foreign R&D are constructed on the basis of industry-specific R&D in the North, North-South trade patterns, and input-output relations in the South. We show that technology diffusion and productivity gains tend to be regional: Jordan (Korea) (Mexico) benefits mainly from trade with the EU (Japan) (North America). In other words, the dynamic version of the "natural trading partners" hypothesis seems to hold for these countries. [ABSTRACT FROM AUTHOR]

This paper advocates that although an absolute notion of poverty should remain an essential ingredient in the evaluation of the standard of living in developing and transition economies, it is time that relative poverty begins to be systematically estimated for those same economies. This prescription is applied to Mexico for the 1992-2004 period, where the Fox administration had officially determined for the first time an absolute poverty line for 2000. As in the Second European Poverty Programme at the end of the 1980s, the relative poverty line is fixed at 50% of mean equivalent expenditures. Absolute and relative poverty behave in opposite ways during the 1992-2000 business cycle, but both decline significantly during the 2000-2004 stagnation period. Relative poverty is above absolute poverty from 1992 to 1994, below it during 1996-1998, and above it again in 2000-2004. In any case, relative poverty in Mexico is well above relative poverty in developed countries. [ABSTRACT FROM AUTHOR]

Labor markets are important, because most people, especially the poor, derive all or the great bulk of their income from the work they do. This paper approaches labor markets through multisector modeling. The first main substantive section presents the essence of multisector modeling, in particular, the role of labor market dualism. Given that labor markets often consist of quite distinct segments, a useful and insightful analytical approach is to start with just two interrelated segments, formal and informal. Accordingly, the next sections present models of wages and employment in the formal economy, the informal economy, and intersectoral linkages respectively. The final substantive section shows the contributions that these models make to understanding and to policy analysis in labor markets. It would not be expected that the same model would fit East Africa and East Asia or South Africa and South Korea. Surely, the "correct" model is context-specific. Blending empirical observation and analytical modeling has yielded great advances. Sound labor market policies require sound labor market models. [ABSTRACT FROM AUTHOR]

This paper summarises the policy implications of a growing debate about the connections between taxation and the quality of governance in developing countries. Taxation --or the absence of tax-- impacts on the quality of governance through two main channels. The first relates is the degree of dependence of governments on general taxation for their financial resources. Many governments do not need to make much tax effort because they have large non-tax incomes from oil, gas and mineral exports or from foreign aid. State elites are then financially independent of citizen-taxpayers. This changes the political incentives that they face, and the ways in which they seek to obtain, use and retain power. The long term consequences for governance are malign: state elites are less responsive and accountable to citizens; and, depending on the sources of non-tax revenue, may have less incentive to build up the political and organisational capacities of the state. States are likely to be simultaneously arbitrary and weak. All else being equal, the dependence of governments on general taxation has positive effects on the quality of governance. But that relations hip is not automatic. How governments tax also matters. We cannot assume that, because they are fully dependent on taxation for revenues, governments will be capable, accountable, or responsive. They may levy taxes coercively, and thereby damage state-society relations and reinforce poor governance. Public authorities in contemporary poor countries face some incentives to tax coercively. Establishing more consensual taxation practices is an important practical route to improving governance. Aid donors could play a more constructive role. [ABSTRACT FROM AUTHOR]