South America

2022
Hausmann, R., et al., 2022. Overcoming Remoteness in the Peruvian Amazonia: A Growth Diagnostic of Loreto.Abstract

Is there a tradeoff between environmental sustainability and economic development? If there is a place where that question can be approximated, that is Loreto. Located on the western flank of the Amazon jungle, Loreto is Peru’s largest state and the one with the lowest population density. Its capital, Iquitos, is the largest city without road access in the world. For three decades, the region’s income and development has diverged from that of Peru and its other Amazonian peers by orders of magnitude. And yet, despite plummeting contributions from natural resources – that predominate in the policy discussion in and on the state – Loreto has developed a more complex productive ecosystem than one would expect, given its geographical isolation. As a result, it has a stock of productive capabilities that can be redeployed in economic activities with higher value-added, able to sustain higher wages and better living standards.

We deployed a thorough Growth Diagnostic of Loreto to identify the most binding constraints preventing private investment and development in sustainable economic activities. In the process, we relied on domestic databases available to the public in Peru and international datasets, combining and validating our analytical insights with extensive field visits to the Peruvian Amazonia and lengthy interviews with policymakers, private businesses, and academia. Improving fluvial connectivity, developing the capacity to sort out coordination failures associated with the process of self-discovery, and substituting oil for solar energy, are the three policy goals that would deliver the largest bang for the reform buck. The latter presents an opportunity for environmental organizations – subsidizing solar – to move away from their status quo of preventing bad things from happening, to a more constructive one that entails enabling good things and sustainable industries to happen.

Project page: Economic Growth and Structural Transformation in Loreto, Peru

2022-10-cid-wp-387-loreto-growth-diagnostic-en.pdf 2020-11-cid-wp-387-loreto-growth-diagnostic-es.pdf
2021
Hausmann, R. & Bustos, S., 2021. New Avenues for Colombia’s Internationalization: Trade in Tasks.Abstract

One of the consequences of COVID-19 is the recognition that many tasks can be done from home. But anything that can done remotely, can be done from abroad.

Given large salary differences between white collar workers across countries, it would make sense for value chains to try to exploit them. This opens an opportunity for Colombia to further promote its integration into the world global value chains and access new markets.

This paper explores the possibility of exporting teleworkable services from Colombia. The goal is to provide useful information to guide strategic interventions to speed-up the development of such service industries in Colombia.

We first introduce a definition of teleworkable jobs and describe its occupations and industries along different dimensions. We show that there are many teleworkable jobs in the US, representing a significant share of industry costs. Then, we show that many industries intensive in teleworkable jobs are currently traded across borders. To quantify Colombia’s advantage providing teleworkable services, we study the cost structure of industries and quantify the potential savings in overall costs if the tasks were performed by Colombians. Given Colombia’s current presence and the density around teleworkable industries we can calculate a proxy of the latent advantage in teleworkable services. We propose an index that summarize these dimensions and rank the potential gains from including telework from Colombia in an industry. We end with a set of policy recommendations to move this agenda forward.

2021-12-cid-wp-401-telework_colombia.pdf
Grisanti, A., et al., 2021. Colombian Diaspora Survey Results Dashboard. Explore DashboardAbstract
As part of the "Role of the Diaspora in the Internationalization of the Colombian Economy" project, Growth Lab researchers surveyed 11,500 members of the Colombian diaspora, located in well over 100 countries. They studied the migration journeys, the diaspora’s attachment to Colombia, the level of diaspora engagement and interest in engaging, the intentions to return back home, the interest in diaspora government policy, and the overall sentiment of the diaspora towards Colombia.
Nedelkoska, L., et al., 2021. The Role of the Diaspora in the Internationalization of the Colombian Economy.Abstract
We studied the geography as well as the demographic and socio-economic characteristics of 1.7 million members of the global Colombian diaspora (34% of the total estimated Colombian diaspora) using census and survey data from major host countries, and 3.5 million Twitter users located around the world presumed to be of Colombian origin. We also studied the locations and industries of Colombian senior managers and directors outside Colombia, using a global database of over 400 million companies. Moreover, we studied the migration journeys, the diaspora’s attachment to Colombia, the level of diaspora engagement and interest in engaging, the intentions to return back home, the interest in diaspora government policy, and the overall sentiment of the diaspora towards Colombia, through a survey which received 11,500 responses from the diaspora in well over 100 countries in less than two months. We additionally interviewed 12 Colombian transnational entrepreneurs and professionals, to understand what attracts them professionally to Colombia, and what may stand in the way of more diaspora engagement and professional growth.
2021-05-cid-wp-397-diaspora-internationalization-colombian-economy.pdf
Hausmann, R., et al., 2021. Loreto’s Hidden Wealth: Economic Complexity Analysis and Productive Diversification Opportunities.Abstract

The Growth Lab at Harvard University, with funding provided by the Gordon and Betty Moore Foundation, has undertaken this investigation with the aim of identifying the existing productive capacities in Loreto, as well as the economic activities with potential to drive the structural transformation of its economy. This paper is part of a broader investigation – Promoting Sustainable Economic Growth and Structural Transformation in the Amazon Region of Loreto, Peru – which seeks to contribute with context-specific inputs for the development of national and sub-national public policies that promote productive development and prosperity in this Peruvian state.

2021-03-cid-wp-386-economic-complexity-loreto-en.pdf.pdf 2020-10-cid-wp-386-economic-complexity-loreto-es.pdf
2020
Hausmann, R., et al., 2020. Buscando virtudes en la lejanía: Recomendaciones de política para promover el crecimiento inclusivo y sostenible en Loreto, Peru.Abstract

Loreto es un lugar de contrastes. Es el departamento más grande del Perú, pero se encuentra entre los de menor densidad poblacional. Su capital, Iquitos, está más cerca de los estados fronterizos de Brasil y Colombia que de las capitales de sus regiones vecinas en el Perú - San Martín y Ucayali. Sólo se puede llegar a Iquitos por vía aérea o fluvial, lo que la convierte en una de las mayores ciudades del mundo sin acceso por carretera. Desde la fundación del departamento, la economía de Loreto ha dependido de la explotación de recursos naturales, desde el boom del caucho a finales del siglo XIX y principios del XX hasta la extracción petrolera y explotación de recursos forestales que predomina en nuestros días. Este modelo ha traído consigo daños ambientales significativos y ha producido un patrón de crecimiento lento y volátil, que ha abierto una brecha cada vez más amplia entre la economía de la región y la del resto del país. Entre 1980 y 2018, Loreto creció a una tasa promedio compuesta anual cuatro veces menor a la del resto del Perú. Es decir, mientras el resto del Perú triplicó el tamaño de su economía, la de Loreto creció algo menos que un tercio.

En la última década (2008-2018), la región también se ha venido distanciando de sus pares amazónicos en el país (Ucayali, San Martín y Madre de Dios), que han crecido a una tasa promedio anual cinco veces mayor. En este período, el ingreso promedio por habitante en Loreto ha pasado de ser tres cuartas partes del promedio nacional en 2008 a menos de la mitad para 2018. Además del rezago económico - o quizás como consecuencia de él -, Loreto también se ubica entre los departamentos con peores indicadores de desarrollo social, anemia y desnutrición infantil del Perú.

En este contexto, el Laboratorio de Crecimiento de la Universidad de Harvard se asoció con la Fundación Gordon and Betty Moore para desarrollar una investigación que proporcionara insumos y recomendaciones de política para acelerar el desarrollo de la región y generar prosperidad de forma sostenible.

2020-12-cid-wp-388-loreto-policy-recommendations-es.pdf
Hausmann, R., et al., 2020. Diagnóstico de Crecimiento de Loreto: Principales Restricciones al Desarrollo Sostenible.Abstract

Sembrado en el flanco oeste de la selva amazónica, Loreto se encuentra entre los departamentos más pobres y con peores indicadores sociales del Perú. El desarrollo enfrenta allí un sinfín de barreras, pero no todas son igualmente limitantes y tampoco hay recursos para atender todos los problemas a la vez. El Laboratorio de Crecimiento de la Universidad de Harvard, bajo el auspicio de la Fundación Gordon and Betty Moore, ha desarrollado un Diagnóstico de Crecimiento que buscar identificar las restricciones más limitantes, y priorizar las intervenciones de políticas públicas alrededor de un número reducido de factores con el mayor impacto. La investigación, que se fundamenta en análisis de bases de datos nacionales e internacionales, e incluye factores cuantitativos y cualitativos derivados de las visitas de campo, identifica a la conectividad de transporte, los problemas de coordinación asociados al autodescubrimiento, y la energía eléctrica, como las restricciones más vinculantes para el desarrollo de Loreto. De acuerdo con nuestras conclusiones, mejoras en la provisión de estos tres factores tendrían un mayor impacto sobre el desarrollo sostenible de la región que mejores en la educación y los niveles de capital humano, el acceso a financiamiento, y otros sospechosos habituales. Este reporte es el segundo de una investigación más amplia – Transformación estructural y restricciones limitantes a la prosperidad en Loreto, Perú – que busca aportar insumos para el desarrollo de políticas públicas a escala nacional y regional que contribuyan a promover el desarrollo productivo y la prosperidad de la región.

2020-11-cid-wp-387-loreto-growth-diagnostic-es.pdf 2022-10-cid-wp-387-loreto-growth-diagnostic-en.pdf
Hausmann, R., et al., 2020. La Riqueza Escondida de Loreto: Análisis de Complejidad Económica y Oportunidades de Diversificación Productiva.Abstract

El Laboratorio de Crecimiento de la Universidad de Harvard, bajo el auspicio de la Fundación Gordon and Betty Moore, ha desarrollado esta investigación para identificar las capacidades productivas existentes en Loreto y las actividades económicas con potencial para liderar la transformación estructural de su economía. Este reporte forma parte de una investigación más amplia – Transformación estructural y restricciones limitantes a la prosperidad en Loreto, Perú – que busca aportar insumos para el desarrollo de políticas públicas a escala nacional y regional que contribuyan a promover el desarrollo productivo y la prosperidad de la región, tomando en cuenta sus características particulares.

2020-10-cid-wp-386-economic-complexity-loreto-es.pdf 2021-03-cid-wp-386-economic-complexity-loreto-en.pdf.pdf
Hausmann, R., et al., 2020. Emerging Cities as Independent Engines of Growth: The Case of Buenos Aires.Abstract

What does it take for a sub-national unit to become an autonomous engine of growth? This issue is particularly relevant to large cities, as they tend to display larger and more complex know-how agglomerations and may have access to a broader set of policy tools. To approximate an answer to this question, specific to the case of Buenos Aires, Harvard’s Growth Lab engaged in a research project from December 2018 to June 2019, collaborating with the Center for Evidence-based Evaluation of Policies (CEPE) of Universidad Torcuato di Tella, and the Development Unit of the Secretary of Finance of the City of Buenos Aires. Together, we have developed research agenda that seeks to provide inputs for a policy plan aimed at decoupling Buenos Aires’s growth trajectory from the rest of Argentina’s.

Listen to the Growth Lab Podcast interview with the authors. 

2020-10-cid-wp-385-independent-engines-buenos-aires.pdf
Lora, E., 2020. Income Changes after Inter-city Migration.Abstract
Using panel data for workers who change jobs, changes in several labor outcomes after inter-city migration are estimated by comparing workers in similar circumstances who move to a new city –the treatment group—with those who stay in the same city –the control group. After matching the two groups using Mahalanobis distances over a wide range of covariates, the methodology of “difference-in-difference treatment effects on the treated” is used to estimate changes after migration. On average, migrants experience income gains but their dedication to formal employment becomes shorter. Income changes are very heterogenous, with low-wage workers and those formerly employed by small firms experiencing larger and more sustained gains. The propensity to migrate by groups of sex, age, wage level, initial dedication, initial firm size and size of city of origin is significantly and directly correlated with the expected cumulative income gains of migration, and inversely with the uncertainty of such gains.
2020-10-cid-fellows-wp-128-inter-city-income.pdf
Levy-Yeyati, E. & Montane, M., 2020. Specificity of Human Capital: An Occupation Space Based on Job-to-Job Transitions.Abstract
Using job transition data from Argentina’s Household Survey, we document the extent to which human capital is specific to occupations and activities. Based on workers’ propensity to move between occupations/industries, we build Occupation and Industry Spaces to illustrate job similarities, and we compute an occupation and industry similarity measures that, in turn, we use to explain wage transition dynamics. We show that our similarity measures influence positively post-transition wages. Inasmuch as wages capture a worker´s marginal productivity and this productivity reflects the degree to which a worker matches the job’s skill demand, our results indicate that a worker´s human capital is specific to both occupation and activity: closer occupations share similar skill demands and task composition (in other words, demand similar workers) and imply a smaller human capital loss in the event of a transition.
2020-04-cid-wp-379-specificity-human-cap-revised.pdf
Revised May 2020.
2019
Hiperinflación y cambios políticos: Democracia, transiciones en el poder y resultados económicos
Barrios, D. & Santos, M., 2019. Hiperinflación y cambios políticos: Democracia, transiciones en el poder y resultados económicos. In L. Vera & J. Guerra, ed. Inflación e Hiperinflación: Miradas, lecciones y desafíos para Venezuela. Caracas. Caracas: Abediciones (UCAB), pp. 185-207. libro-hiper-15-05-19-paginas-185-207.pdf
Pan, C.I., 2019. Tax Avoidance in Buenos Aires: The Case of Ingresos Brutos.Abstract
This study presents evidence of tax avoidance in Buenos Aires, Argentina. I exploit a break in the tax scheme of the most controversial tax, Ingresos Brutos (gross income), between the city and the greater area, which are otherwise identical law and regulation-wise for the studied population. When possible, workers would rather travel longer distances to their jobs than face the tax burden. Given that this type of avoidance is costly, results suggest that Ingresos Brutos might be acting as a binding constraint to growth for businesses.
2019-09-cid-fellows-wp-117-tax-avoidance-buenos-aires.pdf
"City Design, Planning & Policy Innovations" book cover
Barrios, D. & Santos, M.A., 2019. Is There Life After Ford?. In City Design, Planning & Policy Innovations: The Case of Hermosillo. Inter-American Development Bank, pp. 131-53. Publisher's VersionAbstract

This publication summarizes the outcomes and lessons learned from the Fall 2017 course titled “Emergent Urbanism: Planning and Design Visions for the City of Hermosillo, Mexico” (ADV-9146). Taught by professors Diane Davis and Felipe Vera, this course asked a group of 12 students to design a set of projects that could lay the groundwork for a sustainable future for the city of Hermosillo—an emerging city located in northwest Mexico and the capital of the state of Sonora. Part of a larger initiative funded by the Inter-American Development Bank and the North-American Development Bank in collaboration with Harvard University, ideas developed for this class were the product of collaboration between faculty and students at the Graduate School of Design, the Kennedy School’s Center for International Development and the T.H. Chan School of Public Health.

Written by Miguel Angel Santos and Douglas Barrios—two Growth Lab research fellows—the fourth chapter titled “Is There Life After Ford?” focuses on Hermosillo’s economic competitiveness and, specifically, the reasons behind the city’s economic stagnation. It sees the city’s overreliance on the automobile industry as a primary concern. Based on two methodologies developed at the Growth Lab—the Growth Diagnostic and the Economic Complexity Analysis—this piece proposes alternative pathways for Hermosillo’s future economic growth.

Lora, E., 2019. Empleo Femenino en las Ciudades Colombianas: Un Método de Descripción Estadística.Abstract

Este trabajo propone una metodología de descomposición estadística para describir en
forma coherente las dimensiones del empleo femenino según la estructura del mercado
laboral y según la estructura productiva de las ciudades. La metodología se utiliza
para analizar el empleo femenino “pleno y decente” en 23 ciudades colombianas entre
2008 y 2016. Según la estructura laboral, se encuentra que la brecha de género en el
empleo pleno y decente se debe a diferencias en la participación laboral y en la
formalidad del empleo, más que a diferencias entre hombres y mujeres en el desempleo
o en la dedicación al empleo. Según la estructura productiva, se encuentra que la
orientación por sexo y la composición del empleo sectorial de las ciudades tienen
influencia modesta en las diferencias entre ciudades en la generación de empleo
femenino pleno y decente, ya que éstas resultan sobre todo de las diferencias en la
capacidad de generación de para ambos sexos. La metodología también se usa para
analizar los cambios en el período. Se sugieren posibles extensiones de la metodología
propuesta e implicaciones para futuras investigaciones.
- - -

Female Employment in Colombian Cities: A Method of Statistical Description

This paper proposes a methodology of statistical decomposition to describe in a
coherent way the dimensions of female employment according to the structure of the
labor market and according to the productive structure of cities. The methodology is
used to analyze "full and decent" female employment in 23 Colombian cities between
2008 and 2016. According to the labor structure, it is found that the gender gap in full
and decent employment is due to differences in labor participation and in the
formality of employment, rather than differences between men and women in
unemployment or dedication to employment. According to the productive structure, it
is found that the orientation by sex and the composition of sectoral employment in
cities have a modest influence on the differences between cities in the generation of full
and decent female employment, since these are mainly the result of differences in
cities’ capacities to generate employment for both sexes. The methodology is also used
to analyze changes in the period. Potential extensions of the proposed methodology
and implications for future research are suggested.

2019-04-cid-fellows-wp-115-empleo-femenino-cuidades.pdf
Lora, E., 2019. Forecasting Formal Employment in Cities.Abstract
Can “full and productive employment for all” be achieved by 2030 as envisaged by the United Nations Sustainable Development Goals? This paper assesses the issue for the largest 62 Colombian cities using social security administrative records between 2008 and 2015, which show that the larger the city, the higher its formal occupation rate. This is explained by the fact that formal employment creation is restricted by the availability of the diverse skills needed in complex sectors. Since skill accumulation is a gradual path-dependent process, future formal employment by city can be forecasted using either ordinary least square regression results or machine learning algorithms. The results show that the share of working population in formal employment will increase between 13 and nearly 32 percent points between 2015 and 2030, which is substantial but still insufficient to achieve the goal. Results are broadly consistent across methods for the larger cities, but not the smaller ones. For these, the machine learning method provides nuanced forecasts which may help further explorations into the relation between complexity and formal employment at the city level.
2019-04-cid-fellows-wp-114-formal-employment.pdf
Gorrín, J., A., J.R.M. & Ricca, B., 2019. The Impact of the Mexican Drug War on Trade.Abstract
This paper studies the unintended economic consequences of increases in violence following the Mexican Drug War. We study the effects on exports in municipalities with different levels of exposure to violence after the policy. A focus on exports allows us to control for demand shocks by comparing exports of the same product to the same country of destination. Building on the close elections identification strategy proposed by Dell (2015), we show that municipalities that are exogenously exposed to the Drug War experience a 40% decrease in export growth on the in- tensive margin. Large exporters suffer larger effects, along with exports of more complex, capital intensive, and skill intensive products. Finally, using firm level data, we provide evidence consistent with violence increasing marginal exporting costs.
2019-02-cid-fellows-wp-109-mexican-drug-war.pdf
2018
Fool’s Gold: On the Impact of Venezuelan Devaluations in Multinational Stock Prices
Bahar, D., Molina, C.A. & Santos, M.A., 2018. Fool’s Gold: On the Impact of Venezuelan Devaluations in Multinational Stock Prices. Economia LACEA , 19 (1) , pp. 93-128. Publisher's VersionAbstract
This paper documents negative cumulative abnormal returns (CARs) to five exchange rate devaluations in Venezuela within the context of stiff exchange controls and large black-market premiums, using daily stock prices for 110 multinational corporations with Venezuelan subsidiaries. The results suggest evidence of statistically and economically significant negative CARs of up to 2.07 percent over the ten-day event window. We find consistent results using synthetic controls to causally infer the effect of each devaluation on the stock prices of global firms active in the country at the time of the event. Our results are at odds with the predictions of the efficient market hypothesis stating that predictable devaluations should not affect the stock prices of large multinational companies on the day of the event, and even less so when they happen in small countries. We interpret these results as a suggestive indication of market inefficiencies in the process of asset pricing.
bahar-molina-santos-2018.pdf
Hausmann, R., Ganguli, I. & Viarengo, M., 2018. Career dynamics and gender gaps among employees in the microfinance sector. Publisher's VersionAbstract

While microfinance institutions (MFIs) are increasingly important as employers in the developing world, there is little micro-level evidence on gender differences among MFI employees and MFIs’ relation to economic development.

We use a unique panel dataset of employees from Latin America’s largest MFI to show that gender gaps favouring men for promotion exist primarily in the sales division, while there is a significant gender wage gap in the administrative division. Among loan officers in the sales division, the gender gap in promotion and wages reverses.

Finally, female employees tend to work with clients with better loan terms and a history of loans with the institution.

Barrios, D., et al., 2018. Campeche: Diagnóstico Industrial.Abstract

En este estudio se consideraron los productos priorizados en el Reporte de Complejidad Económica de Campeche y se procedió a evaluar su potencial a partir de un conjunto de consideraciones de mercado. Luego, se agregó el potencial de cada producto en distintas colecciones de producto, y se seleccionó una industria cuya estimulación y desarrollo constituya una apuesta de desarrollo prometedora el estado. Respecto de éste se detallaron algunas estadísticas generales como una forma de evaluar su potencial de crecimiento e impacto para la economía local, estatal y nacional.

Para el objeto de este estudio, el sector industrial escogido para el análisis de cuellos de botella fue el de “Textiles” y, más puntualmente, los productos: “Abrigos para mujeres, de punto”, “Calzoncillos para hombres, de punto”, “Camisas para hombres, de punto”, “Camisas para mujeres”, “Camisas para mujeres, de punto” , “Las demás prendas de vestir, de punto”, “Suéteres (jerseys) y artículos similares, de punto”, “Sostenes y artículos similares”, “Trajes para hombres, de punto”, “Trajes para mujeres, de punto”, “Trajes y pantalones para hombres”, “Trajes y pantalones para mujeres” y “Trapos y cordajes textiles en desperdicios”. El desarrollo de esta colección de productos puede representar una oportunidad. Sin embargo, recientemente las exportaciones de estos productos por parte de México han venido perdiendo espacios en el mercado global, siendo el valor de las exportaciones mexicanas de estos productos en la actualidad menos de la mitad de lo que era en 2004.

campeche_diagnosticoindustrial_cidrfwp104.pdf

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