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This paper explores the empirical determinants of external crises on a world panel dataset of 62 countries over the fifty-year period 1970-2019 and estimates their risk trade-offs with the aim of informing macrofinancial prudential policies. The determinants include countries external balance sheets, macroeconomic imbalances, and structural and global factors. It finds that information on the composition of gross positions in countries external financial portfolios is required to gauge the risk of external crisis: debt liabilities are the riskiest component, FDI liabilities are half as risky, and FDI assets are the most protective. Macroeconomic imbalances increase risk but are usually not the key drivers of crises. Adverse global shocks significantly leverage domestic risks. International reserves are powerful risk mitigants that provide high insurance value. The evidence shows that advanced economies are structurally more resilient to withstand exposure to weak external portfolios, macroeconomic imbalances, and global shocks. For the average country the risk of external crisis is on a declining trend mainly driven by improvements in the composition of external portfolio assets magnified by increasing financial integration as well as rising international reserves.

The conventional paradigm about development banks is that these institutions exist to target well-identified market failures. However, market failures are not directly observable and can only be ascertained with a suitable learning process. Hence, the question is how do the policymakers know what activities should be promoted; how do they learn about the obstacles to the creation of new activities? Rather than assuming that the government has arrived at the right list of market failures and uses development banks to close some well-identified market gaps, we suggest that development banks can be in charge of identifying these market failures through their loan-screening and lending activities to guide their operations and provide critical inputs for the design of productive development policies. In fact, they can also identify government failures that stand in the way of development and call for needed public inputs. This intelligence role of development banks is similar to the role that modern theories of financial intermediation assign to banks as institutions with a comparative advantage in producing and processing information. However, while private banks focus on information on private returns, development banks would potentially produce and organize information about social returns.

Este trabajo produce información actualizada y analiza el mercado financiero agropecuario de Uruguay con el objetivo de contribuir a mejorar las políticas e instituciones responsables de su desarrollo eficiente. Se repasan las principales características del entorno macrofinanciero que son relevantes para el desempeño del sector financiero vinculado al agro. Se caracteriza el perfil de créditos al sector agropecuario y su evolución, se detallan las instituciones financieras relevantes. Se repasan otros arreglos institucionales importantes como los fideicomisos financieros, los fondos de financiamiento y los fondos de garantía. Luego, se describen los productos financieros como el crédito tradicional, principal instrumento de financiamiento del sector, así como los fondos de garantía, contratos de leasing, préstamos de cadena de valor, e instrumentos para captación de ahorro basados en fideicomisos financieros. Luego, se analizan las principales políticas públicas tendientes a desarrollar al sector financiero agropecuario, como las leyes de Promoción de Inversiones, de Inclusión Financiera, de fideicomisos financieros, y de fondos de garantía, así como aquellas sectoriales impulsadas y administradas principalmente desde el Ministerio de Ganadería, Agricultura y Pesca. Finalmente, se concluye con una serie de reflexiones para el desarrollo del financiamiento del sector agropecuario que pueden ser útiles para el debate de políticas. [resumen de autor]

IFPRI e IICA, con el apoyo del Secretariado de la Red para la InversiA³n y la FinanciaciA³n de la Agricultura en PequeA±a Escala (SAFIN en inglA©s) con sede en FIDA, organizaron el 6 y 7 de mayo de 2019 en la sede del IICA en San JosA©, Costa Rica, un foro para analizar la experiencia en materia de financiamiento e inclusiA³n financiera para el desarrollo agropecuario, rural y de sistemas alimentarios en AmA©rica Latina y el Caribe (ALC). El objetivo ha sido construir una agenda de temas a analizar para derivar propuestas apropiadas de polA­tica econA³mica en esas Aireas. Previamente se distribuyA³ tambiA©n un documento base para la discusiA³n (DA­az-Bonilla y FernAindez-Arias, 2019). Se invitA³ a especialistas de diferentes paA­ses, representando a organismos pAoblicos, al sector privado, incluyendo grupos de productores agropecuarios, sociedad civil, organismos internacionales y organizaciones financieras de desarrollo no gubernamentales. El evento se iniciA³ con una presentaciA³n del Director General del IICA sobre la situaciA³n general del sector agropecuario en la regiA³n. Las sesiones temAiticas se organizaron con la siguiente estructura: a) una presentaciA³n general para dar un marco a la discusiA³n (usando especialmente el documento base mencionado, DA­az-Bonilla y FernAindez-Arias, 2019); b) la propuesta de diferentes preguntas indicativas para el anAilisis; y 3) las intervenciones de los participantes. A continuaciA³n, se resumen diferentes aspectos del rico debate y anAilisis durante el foro, siguiendo bAisicamente la estructura de temas propuestos en la agenda.

Productive development policies (PDPs) are notoriously hard. They involve a daunting level of technical detail, require public-private collaboration, are in constant danger of capture, and demand time consistency hard to achieve in a politically volatile region. Nevertheless, the potential of PDPs to revitalize the region’s economic performance and spur productivity growth cannot be ignored. This book takes an in-depth look at 17 cases involving productive development agencies from Argentina, Brazil, Costa Rica and Uruguay, identifying key features of institutional design and agency-level practices that make success more likely in this difficult policy arena. Careful study of these experiences might help successful productive development policies gain currency across the region. The cases in this book should not be seen as the exceptions that prove the rule of lackluster PDP performance, but rather as examples that demonstrate the rule can be broken.

Several European countries face challenges reminiscent of those faced by the emerging economies of Latin America. The economic booms in some peripheral Euro-zone countries financed by large capital inflows; the credit and asset price booms and then the busts including Sudden Stops in capital flows; the strong interaction between sovereign debt and domestic banking systems; the role of foreign banks and contagion; and all in the context of a fixed exchange rate, are familiar plotlines for Latin American audiences. For those Euro-zone countries that built up large Euro-denominated external liabilities, Latin America's experience is particularly relevant and worrisome. Still, Europe may be in a better position to navigate a path out of the crisis given cooperative mechanisms that were absent in Latin America, particularly the availability of massive liquidity support. Nonetheless, while such support buys time, it does not guarantee success. This paper argues that reflecting on Latin America's experience provides useful lessons for Europe to improve the chances for a successful resolution.

Why should people--and economies--save? The typical answer usually focuses on the need to protect against future shocks, to smooth consumption during hard times, in short, to save for the proverbial rainy day. This book approaches the question from a slightly different angle. While saving to survive the bad times is important, saving to thrive in the good times is what really counts. People must save so they can invest in their own and their children's health and education, live productive fulfilling lives, and end their days in comfort and peace. Firms must save so they can grow productive enterprises that employ more workers in better jobs to produce quality goods for domestic and international markets. Governments must save to build bridges, highways, and airports that support a productive economy, to provide quality services such as education, health, water, and sanitation to their citizens, and to assure their senior citizens a dignified, worry-free retirement. In short, countries must save for a sunny day -a time when everyone can bask in the benefits of growth, prosperity, and well-being.

This paper shows, using probit analysis, that low national savings increase the risk of macroeconomic crisis. Foreign savings are a poor substitute of national savings not only for domestic investment (Feldstein-Horioka result), but also for stability. It is found that deeper financial integration does not cure low investment and can improve the situation only to the extent that the risks of the foreign saving portfolio can be kept under control. Overall, a fundamental conclusion is that strong national savings are key for robust growth. Extending the probit analysis, the paper shows that the composition of foreign assets and liabilities matters substantially for portfolio risk and derives an index to assess the associated country risk.

This paper combines development accounting exercises with economic theory to assess the importance of total factor productivity and the accumulation of factors of production as engines of growth in Latin America. Using the new, drastically revised Penn World Table (PWT) and Barro-Lee datasets, the paper shows that lower and non-convergent income relative to successful development benchmarks are explained by subpar productivity gains rather than slower factor accumulation. The empirical analysis of the interplay between productivity and accumulation in the process of development suggests that one explanation for this pattern is that investment in Latin America is not as productivity-enhancing as in less distorted economies.

This paper discusses the organizational structure and technical, operational and political capabilities required for successful productive development policies (PDPs). It also discusses how countries can match their PDPs to existing capabilities, as well as expand their capabilities in the long run. The specific difficulties associated with PDPs are also discussed.

An analysis of the performance of the global financial safety net during the 2008-2009 crisis, and an evaluation of its new components, indicates that, from an emerging markets perspective, the net remains full of holes despite recent stitches. This paper therefore proposes an effective and workable international lender of last resort (ILLR) for systemic liquidity crises based on: i) an automatic trigger to access the facility; ii) unilateral country pre-qualification to the facility during Article IV consultations; and iii) liquidity funded by the world's "issuers of last resort". These principles would support a reliable and broad-based ILLR without the carrying costs associated with inefficient reserve hoarding, which would actually work as an effective preventive facility with minimal room for moral hazard.

I. INTRODUCTION The current financial crisis has been the most severe and widespread that the international economy has experienced since the Great Depression of the 1930s. Although it originated in the United States, the crisis spread internationally very quickly. Developing countries in particular were affected through various channels, both financial and real. The financial channels include sharp contractions in domestic asset prices and capital outflows, while the real channels include reductions in export volumes, declines in the prices of primary commodities, and reduced flows of workers' remittances. The worldwide nature of the crisis has generated a debate both in each affected nation and in all the major international financial organizations about the appropriate nature of the policy response. The complicating factors in addressing this issue are that the crisis manifested itself in different forms in different countries, that the effectiveness of the policy instruments available to confront it is likely to differ country by country, that each country faces country-specific constraints and tradeoffs in deploying such policy instruments, and that countries differ in the weights that they place on different policy objectives. Not surprisingly, therefore, there has been much international disagreement about appropriate policy responses, and individual countries have implemented quite different policies. This article considers the challenge of crisis policy from the perspective of Latin America, Its particular concern is with the appropriate role for countercyclical fiscal policy in response to the crisis. This issue was hotly debated within the region in the early stages of the crisis, and prominent voices argued for fiscal restraint, for reasons similar to those used to justify fiscal restraint more recently in many countries outside the region--that is, to safeguard market confidence. In the event, breaking with the past, countries in Latin America indeed undertook moderate fiscal stimulus. Instead of engineering fiscal restraint, fiscal balances in 2009 were allowed to accommodate the downturn in almost every country in the region. (1) In the typical country, the primary fiscal balance in 2009 deteriorated with respect to 2008 by 2.4 points of gross domestic product (GDP), 1.4 points because of lower fiscal revenues, and 1 point on account of higher expenditures. Countercyclical fiscal policy was behind not only spending expansion but, in part, revenue contraction because of lowering taxes. This impulse is planned to continue to some extent over 2010. Recovery is currently under way in Latin America. Because there were other forces driving that recovery, however (such as fast-growing demand for the region's primary products from booming economies in Asia), the contribution of fiscal stimulus to the region's recovery remains to be established. However, the question remains: was countercyclical fiscal policy an ex ante mistake that proved to be less harmful ex post because of fortunate developments in trade with Asia? Or have at least some economies in the region evolved to the point where a countercyclical fiscal stance--which indeed represents a significant break from the region's past--was appropriate ex ante in light of the severity of the crisis? The question is an important one, because it speaks to the crucial issue of whether, after two decades of reform, the region's macroeconomic institutions and circumstances have placed it in a position to be able to actively pursue macroeconomic stability in response to external shocks, rather than exercise restraint for the sake of preserving market confidence. In the event that the current recovery turns out not to be sustained or that an independent new crisis appears on the horizon in the near future, the formulation of an appropriate policy response requires that this question be addressed. Because theory suggests that the answer is likely to depend on country-specific conditions, we illustrate some of the important factors to be considered by focusing on the case of the seven largest economies in the region (the Latin American and Caribbean [LAC]-7 countries, consisting of Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela). …

Several European countries face challenges reminiscent of those faced by the emerging economies of Latin America. The economic booms in some peripheral Euro-zone countries financed by large capital inflows; the credit and asset price booms and then the busts including Sudden Stops in capital flows; the strong interaction between sovereign debt and domestic banking systems; the role of foreign banks and contagion; and all in the context of a fixed exchange rate, are familiar plotlines for Latin American audiences. For those Euro-zone countries that built up large Euro-denominated external liabilities, Latin America's experience is particularly relevant and worrisome. Still, Europe may be in a better position to navigate a path out of the crisis given cooperative mechanisms that were absent in Latin America, particularly the availability of massive liquidity support. Nonetheless, while such support buys time, it does not guarantee success. This paper argues that reflecting on Latin America's experience provides useful lessons for Europe to improve the chances for a successful resolution.

Openness and diversification can be beneficial for economic growth (Brainard and Cooper, 1968; Frankel and Romer, 1999).1 Openness to trade can foster growth by making it easier to import goods that embody new technology, by reaping economies of scale, and by facilitating the process commonly known as learning by doing through exporting, among other channels (Harrison and Rodriguez-Clare, 2010). Export diversification, in turn, reduces sensitivity to sector-specific shocks. Furthermore, deeper participation in global value chains (GVCs) facilitates access to international flows of knowledge and technology, and thus increases the potential for learning and productivity improvements in local firms.

Productivity and financial development go hand in hand. Unfortunately, credit is scarce, volatile, and expensive in Latin America and the Caribbean (IDB, 2004). Average credit to the private sector in the region, at about 40 percent of GDP, is much lower than the averages for the advanced economies (112 percent of GDP) and for East Asian developing countries (64 percent of GDP) (Figure 6.1).1 A GDP-weighted average presents an even bleaker picture, with credit to the private sector at 33 percent of GDP in Latin America, compared to 156 percent for the advanced economies and 98 percent of GDP for developing East Asia. Given this lack of financial development, it is not surprising that productivity in the Latin American and Caribbean region is low.

Chapter 1 made the case that the relevant question is not whether productive development policies (PDPs) should be pursued; rather, the question is how. What types of policies can help address the many market failures that beset the process of productive development—without repeating the errors of the past—and pave the way for a better future? In this regard, the oft-cited image of a pendulum, by which past industrial policies have swung out of vogue and are now back in fashion, is simply not appropriate. It would be more accurate to say that certain well-designed policy interventions may be worthwhile; they have stood the test of time, or can be crafted to meet new challenges. Other types, however, may lack proper conceptual justification or may be too risky to implement effectively. What types of policies should be favored? Which ones should be set aside? There is a need to rethink PDPs, to screen them in order to separate the wheat from the chaff. Rethinking these policies starts with a proper conceptual framework.

This book argues that productive development policies (PDPs) are an important component of a successful development strategy. But designing and implementing successful PDPs is not easy. To begin with, the process requires a well-oiled learning mechanism to diagnose market failures amenable to policy intervention, and design sound policy initiatives. Furthermore, it is not enough to get the policy design right; the public sector as a whole and the agencies in charge of specific policies (which we will call productive development agencies or PDAs) must also have the right capabilities to implement them.1

Economies grow when workers and other factors of production move into projects that have higher productivity. Many higher-productivity projects arise in existing firms. These firms can leverage internal capabilities, including internal sources of capital, to help jump-start these new undertakings. But sometimes, these new, higher-productivity projects originate in new firms. Such firms could offer advantages, such as greater flexibility or closer supervision, compared to existing firms that may be especially useful when generating products or services or using processes that are more innovative. Yet these new endeavors by new firms could have a harder time getting started because entrepreneurs cannot rely on existing firm capabilities, including the ability to borrow cash and collateral from other projects, to attract the right talent, or to secure the required complementary assets for the project to take off.1

The process of economic development does not just center on the ability of countries and their firms to make more of the same goods and services they already produce. Most of the successful cases of development around the world have been associated with the capacity of countries to produce new and better-quality goods and services—that is, to engage in processes of productive transformation that stimulate economic development. As important as it is, focusing on increasing the efficiency with which production is carried out—characteristic of a static approach to economics of “doing more with less”—is not enough; catching up with advanced countries may require a dynamic process of productive transformation.1

Few subjects have been more studied in the social sciences than the role of human capital in economic development. The consensus is that education—broadly understood as the continuous process of acquiring skills and/or capacities—determines the productivity of workers, their income levels, and, ultimately, the overall welfare of society. In turn, a better-educated population boosts the innovative capacity of an economy, speeds up the development of new technologies and products, and facilitates the dissemination of knowledge and adoption of new technologies developed by third parties. Through these diverse channels, higher individual levels of human capital result in higher levels of economic growth and development (Hanushek and Woessmann, 2008).

In the traditional view of productive development policies (PDPs), the roles of government and the private sector are completely separated. Market forces are powerful, and largely lead to desirable outcomes. When a market failure does arise that requires government intervention, a public sector entity identifies the problem and designs a solution. Government sets the rules and conditions, pursuing some collective goals, and firms act within those rules and conditions, attempting to maximize profits. If the rules are well designed, the individual and profit-seeking behavior of the firms leads to good results. In that context, with very well-informed governments, there is limited room for public-private interaction in productive development policy. Each side can do its part independently of the other.

Since the pioneering work of Solow (1957), technological change has been credited with explaining a substantial share of economic growth. Indeed, recent evidence for the United States shows that investments in R&D—a proxy for the innovation effort of a nation—made up 40 percent of the productivity growth observed during the postwar era (Reikard, 2011). Based on these findings, several Latin American and Caribbean countries have established and implemented public policies aimed at enhancing innovation. In practice, the first explicit interventions to encourage innovation by the private sector emerged even earlier, toward the end of World War II. Although many of these policies were either abandoned or dramatically downsized under the structural reforms inspired by the Washington Consensus, the disappointing results in terms of productivity growth have led several countries in the region to reintroduce policies to stimulate innovation and encourage technology adoption.

In a market economy, firms constantly interact in a variety of market transactions with other firms and organizations. They buy and sell goods and services as well as production factors in markets where prices convey essential information. In the course of doing business, they forge linkages that may yield important benefits to themselves, other firms, the economy, and even society at large.1 These benefits may include reducing information asymmetries, generating knowledge spillovers, strengthening economies of scale, and facilitating the generation of public goods. However, these linkages do not occur at random; firms located in a given geographic area or within a specific value chain or cluster are more likely to interact. And even within these geographic and production neighborhoods, linkages are not automatic and may lack the depth to reap all the benefits.

This paper studies the determinants and sustainability of the widespread private capital inflows to middle-income countries after 1989. The key question is whether these flows are mostly ‘pulled’ by attractive domestic conditions or ‘pushed’ by unfavorable conditions in developed countries. An analytical model focusing on country risk is developed and used empirically. It is argued that the observed improvement in country creditworthiness is mostly due to the decline in international interest rates, and that therefore its importance as a proximate cause does not support the ‘pull’ interpretation. All things considered, in most countries the key answer that emerges is ‘push’.

The outlook for economic development for an important group of middle-income countries has again been buoyed by substantial private capital inflows in the 1990s. As in the 1970s, this development has been met with cautious optimism. It is generally accepted that these countries need resource transfers from the rest of the world to support capital formation and growth. It is also generally accepted that these private capital flows make the allocation of resources more efficient. But there is concern that a rapid reversal of market sentiment could impose considerable adjustment costs on these same economies. The authors try to quantify what many consider to be the main reasons debtor countries have access to capital markets again: (a) Domestic policy reform in the debtor countries. (b) Debt and debt service reduction, usually associated with Brady Plan restructuring. (c) Changes in the external market, such as changes in interest rates in industrial countries. They argue that a useful barometer for access to new loans is the market value of existing sovereign debt. It follows that a quantitative analysis of the factors that caused the market value of sovereign debts to rise rapidly after 1989 would also improve understanding of the forces behind the renewed access to international capital. Empirical historical evidence suggests that fiscal reform, privatization, and debt reduction are useful in explaining relative improvements in the standing of debtor countries in international credit markets. Debtor countries with strong reform programs, in other words, are better prepared to withstand deterioration in the external environment. But the reduction in dollar interest rates since 1989 appears to be the chief factor in the debtor countries' renewed access to international loans. The authors estimate the effect of increases in dollar interest rates and conclude that the typical debtor country remains vulnerable to increases in interest rates that are well within the range of recent experience.

Europe faces challenges reminiscent of Latin American financial crises, namely unsustainable sovereign spreads, banking system distress, sudden stops in capital flows and growth rate collapse. The failure of recent liquidity support to normalize the situation suggests the need to refocus the policy debate on fundamentals: structural reform for growth and, where needed, restructuring to resolve banking crises and the debt overhang. Latin America’s experience yields relevant policy lessons for Europe on all these fronts, tempered only by the slight exception that sharp real devaluation, which was key to spearheading recovery in Latin America, is unfeasible in the eurozone. Struggling eurozone countries are caught between a rock and a hard place, as the currency union imposes strict policy constraints while the reintroduction of national currencies under conditions of crisis would be catastrophic. Nevertheless, contemporary Europe stands a better chance of recovery because, in contrast with the Latin America experience, the European Union possesses greater avenues for international cooperation. With respect to financial support, a resourceful European Central Bank able to avoid chaotic adjustment by brute force is a decisive advantage of Europe relative to Latin America, which only had access to the weaker and less reliable IMF. Arguably, the limited nature of external support strongly contributed to the depth of Latin America’s great collapses. European cooperation can explore and exhaust alternatives to a euro exit to the benefit of all union members and, if dissolution becomes unavoidable, ensure amicable support to ease the transition. The path to success remains uncharted, however, and implementation of the necessary regional mechanisms will require innovation and political will. If the available means of cooperation are not used effectively, crisis countries in Europe may fare worse than those in Latin America. L’Europe rencontre actuellement des difficultés qui ne sont pas sans rappeler les crises financières latino-américaines : des spreads* insoutenables entre les dettes souveraines, un système bancaire fragilisé, de brusques renversements des flux de capitaux et un effondrement du taux de croissance. L'échec des récentes injections massives de liquidités pour tenter de normaliser la situation donne à penser qu’il est devenu indispensable de recentrer le débat politique sur les fondamentaux : réformes structurelles soutenant la croissance et, le cas échéant, restructurations en vue de résoudre les crises bancaires et le surendettement. Quant à la manière de régler tous ces problèmes, l’Europe peut tirer de l'expérience latino-américaine des enseignements fort pertinents, à cette nuance près cependant qu’une forte dévaluation en termes réels – fer de lance de la reprise en Amérique latine – est irréalisable dans la zone euro. Les pays en difficulté dans la zone euro sont pris entre le marteau et l'enclume : l'union monétaire impose de strictes contraintes politiques mais la réintroduction des monnaies nationales dans ces conditions de crise s’avèrerait catastrophique. Néanmoins, l'Europe contemporaine a de meilleures chances de se relever parce que, contrairement à l'expérience latino-américaine, l'Union européenne dispose de plus grandes possibilités de coopération internationale. En matière de soutien financier, la Banque centrale européenne dispose d’assez de ressources et d’ingéniosité pour éviter d’imposer un ajustement chaotique ; c’est un avantage décisif de l'Europe par rapport à l'Amérique latine, qui ne pouvait compter que sur le FMI, plus faible et moins fiable. Il est en effet incontestable que le caractère limité de l'aide extérieure a fortement contribué à la gravité des grands effondrements de l'Amérique latine. La coopération européenne a les moyens d’envisager et d’épuiser toutes les alternatives à une sortie de l'euro au bénéfice de tous les membres de l’Union et, si la dissolution devenait inévitable, d'apporter son soutien bienveillant à une transition en douceur. Personne ne sait quel chemin mènera à la réussite, cependant, et la mise en œuvre des mécanismes régionaux nécessaires exigera innovation et volonté politique. Si les moyens de coopération disponibles ne sont pas utilisés efficacement, les pays européens en crise risquent de s’en tirer plus mal que ceux d'Amérique latine. *Différences entre les rendements des obligations émises par certains pays moins bien notés par les agences et ceux des pays jouissant du triple A. Europa se enfrenta a desafíos que nos recuerdan a aquellos de las crisis financieras latinoamericanas, principalmente márgenes soberanos insostenibles, dificultades en el sistema bancario, interrupciones repentinas en los flujos de capital y colapso de la tasa de crecimiento. El reciente fracaso del apoyo a la liquidez para normalizar la situación sugiere la necesidad de reenfocar el debate político en lo fundamental: una reforma estructural para el crecimiento, y en los casos que sea necesario, una reestructuración para resolver las crisis bancarias y el sobreendeudamiento. La experiencia de Latinoamérica nos ofrece lecciones relevantes de políticas para Europa en todos estos frentes, considerando únicamente la ligera excepción de que una pronunciada devaluación real, punto clave para iniciar la recuperación en América Latina, es inviable en el caso de la Eurozona. Los países en dificultades de la Eurozona están atrapados entre la espada y la pared, ya que la unión monetaria impone estrictas restricciones políticas, mientras que la reintroducción de monedas nacionales bajo condiciones de crisis resultaría catastrófica. Sin embargo, la Europa contemporánea tiene una mejor posibilidad de recuperación, porque en contraste con el caso latinoamericano, la Unión Europea posee mayores opciones de cooperación internacional. Con respecto al apoyo financiero, la existencia de un Banco Central Europeo fuerte, capaz de evitar ajustes caóticos de forma impulsiva, es una ventaja decisiva para Europa en relación con Latinoamérica, donde sólo se tenía acceso al más débil y menos confiable FMI. Posiblemente, la naturaleza limitada del apoyo externo contribuyó marcadamente a la gran intensidad de los colapsos latinoamericanos. La cooperación europea puede explorar y agotar todas las alternativas a una salida del euro en beneficio de todos los miembros de la Unión, y, si la disolución se vuelve inevitable, garantizar un apoyo afable para facilitar la transición. No obstante, el camino al éxito continúa inexplorado, y la implementación de los mecanismos regionales necesarios requerirá innovación y voluntad política. Si los medios de cooperación existentes no se utilizan de manera efectiva, los países europeos en crisis podrían sufrir consecuencias más graves que aquellos en Latinoamérica.

Export Pioneers in Latin America analyzes a series of case studies of successful new export activities throughout the region to learn how pioneers jump-start a virtuous process leading to economic transformation. The cases of blueberries in Argentina, avocados in Mexico, and aircraft in Brazil illustrate how an initially successful export activity did not stop with the discovery of a single viable product, but rather continued to evolve. The book explores the conjecture that costly burdens to entrepreneurial self-discovery (due to the deterrent effects of imitation by competitors) have held back potential exporters in post-reform Latin America. It also considers the conjecture that new export activities are a complex enterprise that can only come to fruition when innovative contributions of many actors are somehow provided jointly.

An analysis of the performance of the global financial safety net during the 2008-2009 crisis, and an evaluation of its new components, indicates that, from an emerging markets perspective, the net remains full of holes despite recent stitches. This paper therefore proposes an effective and workable international lender of last resort (ILLR) for systemic liquidity crises based on: i) an automatic trigger to access the facility; ii) unilateral country pre-qualification to the facility during Article IV consultations; and iii) liquidity funded by the world's "issuers of last resort". These principles would support a reliable and broad-based ILLR without the carrying costs associated with inefficient reserve hoarding, which would actually work as an effective preventive facility with minimal room for moral hazard.

This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The regions development performance is assessed by contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. The paper finds that total factor productivity is the predominant factor: low productivity and slow productivity growth, as opposed to impediments to factor accumulation, are the key to understanding Latin Americas low income relative to developed economies and its stagnation relative to other developing countries. While policies easing factor accumulation would help somewhat in improving productivity, for the most part, closing the productivity gap requires productivity-specific policies.

In this paper we analyze the long-run relationship between output collapses—defined as GDP falling substantially below trend—and total factor productivity (TFP). We use a panel of 76 developed and developing countries during the period 1960–2004 to identify episodes of output collapse and estimate counterfactual post-collapse TFP trends. Collapses are concentrated in developing countries, especially Africa and Latin America, and were particularly widespread in the 1980s in Latin America. Overall, output collapses are systematically associated with long-lasting declines in TFP. We explore the conditions under which collapses are least or most damaging, as well as the type of shocks that make collapses more likely or severe. Furthermore, we provide a quantification of the associated welfare loss with output collapses.

In the first eight decades of the XX century, Brazil ranked among the countries with highest growth rates in the world. During the period 1930-80, in particular, it managed to reduce its per capita income gap vis-a-vis industrialized economies and seemed poised to escape underdevelopment early in this century. However, this dream never materialized; Brazil’s growth performance deteriorated sharply over the following quarter century, never fully recovering from the second oil shock and the foreign debt crisis. In this period Brazil experienced much lower and more volatile growth, with its long-term annual growth rate (ten-year moving average) fluctuating in the 2% to 3% range, well below the 6% to 10% range that prevailed in 1950-80. Brazil reacted by embarking on reforms, from trade liberalization to changes in fiscal and social policies. Policies improved, especially after price stabilization, in 1994, and, if anything, have been better than through most the high growth period, but apparently to no avail. Something happened in this later period that prevented Brazil from regaining the rapid growth that it had exhibited previously. What might it have been?

This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The region’s development performance is assessed by contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. The paper finds that total factor productivity is the predominant factor: low productivity and slow productivity growth, as opposed to impediments to factor accumulation, are the key to understanding Latin America’s low income relative to developed economies and its stagnation relative to other developing countries. While policies easing factor accumulation would help somewhat in improving productivity, for the most part, closing the productivity gap requires productivity-specific policies.

There is an increasing need for a system of international lending of last resort (ILLR) to provide a safety net in the event of financial crises in vulnerable countries as financial globalization deepens and spreads. Multilateral progress to address liquidity and solvency crises has been patchy and inconsistent, with no clear distinction between the two; in particular, there is still no framework to address sovereign debt restructuring. This paper proposes an integrated system of specialized ILLR facilities to address problems of liquidity, adjustment, and debt restructuring in a focused but robust way as crises evolve and morph, structured in tiers to cater to countries’ capacity to prequalify for automatic support. It further proposes feasible legal reform to subject creditors to standstills and seniority dilution as in domestic bankruptcy in order to empower ILLR to facilitate orderly workouts in debt restructuring. Multilateral development banks would play important supporting roles.