can public policy improve economic performance?repositorio.enap.gov.br/bitstream/1/2957/23/23 -...
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Can Public Policy Improve Economic Performance?:
The Case of Latin America
Thomas J Trebat
September 2015
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GDP Growth in Latin America Has Fallen
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A Frustrating Pattern in Commodity Prices: Boom and Bust
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Source: WorldBank
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Sources: The Economist Google Images
The rise of China trade: demand for natural resources
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A Natural Resource Curse?: Innovation Is Lagging
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How do you go from copper to computers? | The Economist September 11th, 2010
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The region continues to attract foreign investment
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Falling Behind or Catching Up?: Latin American GDP Relative to the US in the Last Thirty Years
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Source: Angus Maddison, World Economy
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Productivity Per Worker = Competitiveness
• Many factors determine productivity in a modern economy
• The research points to three sets of variables as important (See Porter et al., World Economic Forum, Acemoglu and Robinson)
• Monetary and Fiscal Policy
• Social and Political Institutions and Infrastructure
• Microeconomic Factors – Quality of the national business environment
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Theory of Economic Growth: twelve determinants of global competitiveness
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Source: World Economic Forum
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Income thresholds for establishing stages of development
Stage of development GDO per capita (in US$)
Stage 1: Factor driven <2,000
Transition from stage 1 to stage 2 2,000 - 3,000
Stage 2: Efficiency driven 3,000 - 9,000
Transition from stage 2 to stage 3 9,000 - 17,000
Stage 3: Innovation driven >17,000
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Source: WORLD ECONOMIC FORUM
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Stage 1:
Factor-driven
Transition
from 1 to 2
Stage 2:
Efficiency-
driven
Transition
from 2 to 3
Stage 3:
Innovation
Driven
Bolivia Guatemala Colombia Argentina Puerto Rico
Haiti Honduras Peru Brazil
Costa Rica Chile
Mexico
Source: World Economic Forum, 2011
Latin America: Predicted Levels of Competitiveness Based on Observed Per Capita Incomes
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The Global Competitiveness Report 2014-2015 Latin America and the Caribbean
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A challenge of productivity in Latin America
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Brazil in the Global Competitiveness Index 2013-14
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Source: World Economic Forum
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In some aspects of innovation, Brazil compares favorably to China….
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Source: WEF, 2012
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General Overview of the Country
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Brazil: Quality of the Business Environment
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How Brasil and comparator economies rank on the ease of getting credit?
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Conclusions: Public Policy Needs to Focus on the Business Environment
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• Competitiveness is affected by many variables that, taken together, drive productivity (output per worker).
• Here, the focus has been on micro factors: the quality of the national business
environment and the sophistication of company operations. • In Brazil, this agenda is familiar, but the data clearly suggest that a new focus on
micro factors can pay off substantially in terms of improved economic growth. • This competitiveness agenda does not solely depend on the national government
• And it can be pursed even in times of economic crisis!
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