panel 5: political and economic reforms in latin america wednesday, april 19 th (3:00-4:15pm)

Panel 5: Political And Economic Reforms In Latin America

Wednesday, April 19th (3:00-4:15pm)

13th Symposium onDevelopment and Social Transformation

Reparations: Key To Reconciliation In Peru

Marcela Guerrero Casas



Peru’s Truth and Reconciliation Peru’s Truth and Reconciliation Commission (CVR) Reparations : Commission (CVR) Reparations :

The key to reconciliation?The key to reconciliation?

Marcela Guerrero CasasMarcela Guerrero CasasMaxwell School of Citizenship and Public AffairsMaxwell School of Citizenship and Public Affairs

Syracuse UniversitySyracuse UniversityApril, 2005April, 2005

OverviewOverview Historical contextHistorical context

What are reparations?What are reparations?

Peru’s Comprehensive Plan for Reparations Peru’s Comprehensive Plan for Reparations (PRI)(PRI)

Challenges for implementationChallenges for implementation

Comisión de Verdad y Comisión de Verdad y Reconciliación (CVR)Reconciliación (CVR)

Established in June 2001Established in June 2001 Composed by 12 membersComposed by 12 members Mission: to analyze crimes and human rights Mission: to analyze crimes and human rights

violations from 1980 and 2000, to hold public violations from 1980 and 2000, to hold public audiences, realize exhumations, national audiences, realize exhumations, national process of violence, regional histories and process of violence, regional histories and institutional reforms institutional reforms

Estimated 70,000 deaths. 54% (Shining Path Estimated 70,000 deaths. 54% (Shining Path PCP-SL), less than 2% (Túpac Amaru PCP-SL), less than 2% (Túpac Amaru Revolutionary Movement (MRTA), and the rest Revolutionary Movement (MRTA), and the rest by government forces or rondasby government forces or rondas

What are reparations?What are reparations? Restorative justice mechanismRestorative justice mechanism Protected and mandated under international Protected and mandated under international

law (Rome Statute, Declaration of Human law (Rome Statute, Declaration of Human Rights, Convention against Torture, etc.)Rights, Convention against Torture, etc.)

Material reparations: rehabilitation, Material reparations: rehabilitation, restitution and compensationrestitution and compensation

Symbolic: memorials, museums, Symbolic: memorials, museums, exhumations, etc.exhumations, etc.

Peru’s Comprehensive Plan Peru’s Comprehensive Plan for Reparations (PRI)for Reparations (PRI)

Established on July 20, 2005Established on July 20, 2005 Who is eligible? Forced disappearance, Who is eligible? Forced disappearance,

abduction, extrajudicial execution, murder abduction, extrajudicial execution, murder forced displacement, arbitrary detention, forced displacement, arbitrary detention, torture, forced displacement, etc.torture, forced displacement, etc.

Five-dimensional framework: psycho-social, Five-dimensional framework: psycho-social, participatory decision-making, intercultural participatory decision-making, intercultural sensitivity, gender equality and symbolism.sensitivity, gender equality and symbolism.

PRIPRI Categories:Categories:

Symbolic -December 10 -Day of National Symbolic -December 10 -Day of National ReconciliationReconciliation

Health -training of physicians, community Health -training of physicians, community interventionsinterventions

Education - adult education, scholarships, fee Education - adult education, scholarships, fee waiverswaivers

Civil rights -legal status of the disappeared, Civil rights -legal status of the disappeared, removingn criminal records of those unjustly removingn criminal records of those unjustly imprisoned, etc.imprisoned, etc.

Economic Economic Collective -community-based programsCollective -community-based programs

ChallengesChallenges

Budgetary constraintsBudgetary constraints Individual financial reparationsIndividual financial reparations Are the victims psychological ready?Are the victims psychological ready? Is it economically fair?Is it economically fair? It could divide society rather than promote It could divide society rather than promote

national unitynational unity

A Proposal To Reform The Presidential Houses In Latin America

Guillermo Gonzales Arica



A proposal of modernization A proposal of modernization of Presidential Houses in of Presidential Houses in Latin America to obtain a Latin America to obtain a

better Presidential Decision better Presidential Decision Making SystemMaking System

Guillermo Gonzales-AricaGuillermo Gonzales-Arica

OverviewOverview IntroductionIntroduction Four principal aspects to be considered in a Four principal aspects to be considered in a

modernization processmodernization process Functions that support presidential dutiesFunctions that support presidential duties The role of the Chief of Cabinet or Prime The role of the Chief of Cabinet or Prime

MinisterMinister The role of Presidential Office and his advisorsThe role of Presidential Office and his advisors The relationship with the ParliamentThe relationship with the Parliament The need of a good Communications Policy The need of a good Communications Policy ConclusionsConclusions RecommendationsRecommendations

IntroductionIntroduction Democracy in Latin AmericaDemocracy in Latin America Perception and acceptance of democratic Perception and acceptance of democratic

governments in Latin Americagovernments in Latin America Latin American counties count with a Latin American counties count with a

Presidentialist Constitutional regime. Presidentialist Constitutional regime. Presidents have important legal duties Presidents have important legal duties and power. and power.

The region’s political tradition of The region’s political tradition of caudillos (individualist leaders with caudillos (individualist leaders with charisma) charisma)

Four principal aspects to be Four principal aspects to be considered in a modernization considered in a modernization

process:process: The role of the Chief of Cabinet,The role of the Chief of Cabinet, The role of the Presidential Office The role of the Presidential Office

and his advisors, and his advisors, The relationship with the Parliament The relationship with the Parliament

andand The need of a good Communications The need of a good Communications

Policy.Policy.

Functions that support Functions that support presidential dutiespresidential duties

Establish a permanent relation with Establish a permanent relation with the Congress.the Congress.

Coordinate the Government State Coordinate the Government State Policies.Policies.

Give legal advisory to the Give legal advisory to the President.President.

The elaboration of strategic studies The elaboration of strategic studies about the political and social about the political and social situation.situation.

The role of the Chief of The role of the Chief of Cabinet or Prime MinisterCabinet or Prime Minister

The President should share power The President should share power with the chief of the cabinet.with the chief of the cabinet.

President’s representative in the President’s representative in the ParliamentParliament

Coordination of the application of Coordination of the application of State PoliciesState Policies

Lead the follow up of the legislative Lead the follow up of the legislative productionproduction

The role of Presidential The role of Presidential Office and his advisors Office and his advisors

Conflicts between advisors and Conflicts between advisors and cabinet of ministriescabinet of ministries

Presidential Houses Vs MinistriesPresidential Houses Vs Ministries Advisors should feel passion for the Advisors should feel passion for the

anonymity anonymity Presidential advisors, their power Presidential advisors, their power

and constitutional responsibility and and constitutional responsibility and liability.liability.

The relationship with the The relationship with the Parliament Parliament

Pressures, communication an Pressures, communication an relationshipsrelationships

White House case (Reagan)White House case (Reagan) Inter-branch cooperation (Chile)Inter-branch cooperation (Chile) Congressional controlCongressional control

The need of a good The need of a good Communications Policy Communications Policy

Presidential Press OfficesPresidential Press Offices Avoiding contradictions Avoiding contradictions “Preventing “Preventing

leakage”leakage” Role of spokespersonsRole of spokespersons Governmental achievements in the Governmental achievements in the

mediamedia

ConclusionsConclusions Presidents in the Latin American region have a huge Presidents in the Latin American region have a huge

amount of responsibilities and concentrate too much amount of responsibilities and concentrate too much power.power.

The Prime Ministers or Chiefs of Cabinet in most of The Prime Ministers or Chiefs of Cabinet in most of the countries of the region have many other the countries of the region have many other responsibilities besides coordinating the work of the responsibilities besides coordinating the work of the rest of members of the Cabinet rest of members of the Cabinet

When the Presidential team of advisors gains much When the Presidential team of advisors gains much more influence and power for decisions than the Chief more influence and power for decisions than the Chief of Cabinet or Prime Minister, the effectiveness of the of Cabinet or Prime Minister, the effectiveness of the Government’s work is negatively affected Government’s work is negatively affected

The distance or lack of periodic dialogue between The distance or lack of periodic dialogue between Presidential advisors, Members of Cabinet and Presidential advisors, Members of Cabinet and Members of the Parliament that belong to the Members of the Parliament that belong to the Governmental group puts in risk the accomplishment Governmental group puts in risk the accomplishment of the Government Action Planof the Government Action Plan

RecommendationsRecommendations The Presidents need to delegate more responsibilities to the Chiefs of Cabinet The Presidents need to delegate more responsibilities to the Chiefs of Cabinet

or Prime Ministers.or Prime Ministers. The Chiefs of Cabinet or Prime Ministers must be focused in a team work with The Chiefs of Cabinet or Prime Ministers must be focused in a team work with

the Presidentthe President The Presidential advisors must work in coordination with the Chief of Cabinet.The Presidential advisors must work in coordination with the Chief of Cabinet. Periodic work meetings, having an established agenda should be hold between Periodic work meetings, having an established agenda should be hold between

the Chief of Cabinet and its members, Presidential advisors and Members of the Chief of Cabinet and its members, Presidential advisors and Members of the Parliament that belong to the Governmental political group. the Parliament that belong to the Governmental political group.

The Presidential Houses or the Offices that supports the Presidents’ work The Presidential Houses or the Offices that supports the Presidents’ work should organize those meetings.should organize those meetings.

Periodic meetings, focused in the Government’s Action Plan should be hold Periodic meetings, focused in the Government’s Action Plan should be hold with the main representatives of the national and international media, with the main representatives of the national and international media, organized by the Presidential Houses.organized by the Presidential Houses.

International Organizations, such as the World Bank, Inter American International Organizations, such as the World Bank, Inter American Development Bank, the Organization of American States and the United Development Bank, the Organization of American States and the United Nations must be called by the Governments in the region to focus their Nations must be called by the Governments in the region to focus their technical and financial support in the modernization of the Presidential technical and financial support in the modernization of the Presidential Decision Making Models. Decision Making Models.

The Presidents members of Grupo de Rio (Group of Rio, a regional The Presidents members of Grupo de Rio (Group of Rio, a regional mechanism of consultation that gathers 19 Presidents in the Latin American mechanism of consultation that gathers 19 Presidents in the Latin American region) should reserve a space in their next Summit to make an analysis and region) should reserve a space in their next Summit to make an analysis and encourage a debate about the role of the Presidential Houses or the encourage a debate about the role of the Presidential Houses or the Presidential Decision Making Systems in the achievement of their main Presidential Decision Making Systems in the achievement of their main governmental goals.governmental goals.

Thank you!Thank you!

The Colombian Development Experience: Trade-offs And Mixed Results

Jonathan Gupton



Colombia: Rural to Urban Migration and the Informal Sector

Jonathan Gupton April 19, 200

Maxwell School of Citizenship –Syracuse University

Colombia’s Informal Sector• Informal Sector: sector of economy that does not comply with labor market legislation and does not provide worker benefits.

• It is estimated that between 50 and 60% of the labor force in Colombia is employed in the informal sector.

• Negatives: unregulated hours and working conditions, often subject to harassment from authorities or exploitation from bosses trying to circumvent labor unions.

• Positives: largely voluntary, ideal for workers (especially female) that put a high premium on flexible hours. Provides temporary cushion against loss of job due to trade reforms.

Labor Participation vs. Employment Rate

Source: Flóres, Universidad de los Andes, Colombia (2003)

7 Cities:1. Bogotá 2. Cali3. Medellín 4. Barranquilla 5. Cartagena 6. Bucaramanga7. Cucuta

• labor participation rate generally increased, but not necessarily in the same fashion as the employment rate.

Unemployment vs. Informal Employment

Source: Flóres, Universidad de los Andes, Colombia (2003)

• For the same set of 7 cities, Overall correlation between recent rises in unemployment, underemployment, and informal employment.

Why is the informal economy so large in Colombia?

• Most explanations center on 2 key factors:1. Reduction of trade barriers (liberalization) leading to

decreasing demand for labor2. Increasing supply of labor in recent years (after an initial

slowdown in the 80s and 90s) due to an elevation of displaced persons in conflict areas.

• Import penetration increased from around 20% in 1984 to over 30% in manufacturing in Colombia;

• For comparison, in Brazil, it grew from 5.7% in 1987 to 11.6% in 1998.

• Sebastian Edwards (1999), along anecdotal evidence suggest that unions do not have significant power in most Colombian industries (public sector and the petroleum industry are an exception), while in Brazil the evidence suggests that unions played a much more integral role in labor negotiation.

Shift in sectors – Rural to Urban migration

Sector 1938 1951 1964 1974 1984

Agriculture 59.2 55.9 49.0 41.9 32.7

Commerce 5.7 5.6 8.9 12.6 17.8

Construction 2.8 3.7 4.5 4.7 5.0

Manufacturing 14.1 12.7 13.2 14.3 16.4

Mining 2.3 1.7 1.6 0.8 1.1

Services 15.9 20.4 22.8 25.7 27.0

TOTAL 100.0 100.0 100.0 100.0 100.0

Source: Departamento Nacional de Planeación, Plan de Economía Social, Agosto 1987, Bogotá, 1987, 168.

Informal Economy spike in late 90s• The Colombian government, DANE (Departamento Administrativo Nacional

de Estadística), defines informal employment as: “self employed workers different from independent professionals, family workers, domestic servants, and paid workers in small firms (up to 10 workers).”

• Labor Demand decrease in the late 90s: financial crises of late 90s, macroeconomic effect on overall economic ouput and international capital flows.

• Labor Supply increase in the late 90s: increased access to government services such as health care, rural migrants from forced labor camps, escalating violence (not necessarily economic migrants).

Multiple Viewpoints• There are those that attribute this high unemployment and high

informal sector employment to structural reforms in the economy, of the type outlines in the Washington Consensus or otherwise “neo-liberal” macro adjustments.

• There are others which contribute this high migration strictly to a failure of Colombian, US, or international authorities to bring about a sustainable peace in the 40 year Colombian civil war.

• There are others (Goldberg, Pavcnik, National Bureau of Economic Research, 2003), that suggest correlation between decreased tariffs and increased unemployment (or increased employment in the informal sector) is much weaker than is the correlation between labor market rigidities and increased unemployment.

Implications and Policy Tradeoffs• On one hand, informal sector, unregulated economics plays a vital

role in the survival of many low-income households, distributing income perhaps more efficiently than the government.

• Creates an environment for thriving small businesses.• On another hand, although there is a difference between an

informal economy and an illegal economy, there often is an overlap. (already “concealed” informal sector provides cover for the illicit sector)

• Also, the lack of regulation leads to problems such as lack of pollution control and environmental control.

• On one hand, people are responding to incentives, utilizing human creativity and ingenuity, and and surviving with their small businesses, but on another hand, it allows the government to wash their hands from responsibility of rapidly growing urban poverty.

Banking Sector Reform In Peru

Juan Carlos Izaguirre



BANKING SECTOR BANKING SECTOR REFORM REFORM

AND ITS ROLE IN AND ITS ROLE IN DEVELOPMENTDEVELOPMENT

The case of PeruThe case of Peru

April 19, 2006April 19, 2006Juan Carlos IzaguirreJuan Carlos Izaguirre

Banking Reform - TimelineBanking Reform - Timeline

Banking Sector Banking Sector ReformReform

Liberalization of Liberalization of marketmarket

Improvement of Improvement of supervisory and supervisory and regulatory regulatory agenciesagencies

Economic Economic CrisisCrisis

Stabilization Stabilization ProgramProgram

Fiscal/monetary Fiscal/monetary equilibriumequilibrium

1987-1990 1990-1993 1994-1997

Economic Economic growthgrowth

Banking SectorBanking Sector Improving Improving

supervisory supervisory schemesschemes

International International standardsstandards

Credit boomCredit boom

ThreadThread1998-2000

Inter-Inter-national national CrisesCrises

Banking SectorBanking Sector Capacity of Capacity of

the state to the state to resolve crisisresolve crisis

Minimized Minimized effects over effects over economy economy

Growth … Growth … and and

develop-develop-ment?ment?

2001-….

Banking Banking Sector Sector AgendaAgenda

AgricultureAgriculture Small Small

businessbusiness Interest Interest

ratesrates

Economic CrisisEconomic Crisis1987-19901987-1990

Macroeconomic Macroeconomic Indicators (%)Indicators (%) 19861986 19891989

Inflation 62.9 2,775.3

GDP growth 10.8 -11.9

Investment growth 45.6 -26.1

Total liquidity / GDP 14.9 6.3

Tax rate 11.2 5.8

Fiscal deficit / GDP 5.2 6.2

Banking System: High participation of the state -Interest rate ceilings-Subsidies-Taxes -Compulsory use of local currency -Multiple exchange rates

Collapse of the Collapse of the banking systembanking system

Stabilization ProgramStabilization Program1990-19921990-1992

Fiscal and monetary equilibrium policiesFiscal and monetary equilibrium policies Banking sector (IADB, WB): Banking sector (IADB, WB):

• liberalization of interest rate, exchange rateliberalization of interest rate, exchange rate• New Banking law (1991): more requirements for New Banking law (1991): more requirements for

constitution of banks, openness to foreign capital, constitution of banks, openness to foreign capital, creation of deposit insurance fund, creation of creation of deposit insurance fund, creation of database of debtorsdatabase of debtors

• Liquidation of most state banks in 1992Liquidation of most state banks in 1992• New Central Bank law (1992): limiting role to preserve New Central Bank law (1992): limiting role to preserve

monetary stabilitymonetary stability• Modernization of Supervisory and regulatory agencies Modernization of Supervisory and regulatory agencies

(IADB: $ 221’)(IADB: $ 221’) Reforms under Fujimori’s democratic periodReforms under Fujimori’s democratic period

Economic Growth Economic Growth 1994-19971994-1997

Growth (7%) and fine-tuning of reformsGrowth (7%) and fine-tuning of reforms Banking sector: Banking sector:

• Privatization of remaining state commercial banks Privatization of remaining state commercial banks (1994, 1995) (1994, 1995)

• New Banking Law (1996): restricted participation of New Banking Law (1996): restricted participation of state in banking sector, application of International state in banking sector, application of International Standards of SupervisionStandards of Supervision

• Training Programs for supervisory agencyTraining Programs for supervisory agency

Outcomes:Outcomes:19901990 19981998

Financial intermediationFinancial intermediation 3.4%3.4% 23%23%AssetsAssets 4 bn4 bn 22 bn22 bnForeign capitalForeign capital 3%3% 20%20%Non-performing loansNon-performing loans 13%13% 7%7%

International Crises ThreadInternational Crises Thread1998-20001998-2000

““The NiThe Niñño” climatic phenomenono” climatic phenomenon Asian, Russian and Brazilian financial crisesAsian, Russian and Brazilian financial crises ““Credit boom” in consumption sector, credit Credit boom” in consumption sector, credit overexposure, bad governance of Peruvian banksoverexposure, bad governance of Peruvian banks

Regulatory agency capable of responding Regulatory agency capable of responding to thread to thread (new mechanisms to resolve crisis)(new mechanisms to resolve crisis)

10 banks went out of Peruvian system, but no 10 banks went out of Peruvian system, but no systemic risksystemic risk

Minimum cost, compared to other Latin American Minimum cost, compared to other Latin American countries.countries.

Growth… and development?Growth… and development?2001-….2001-….

Continuous economic growth and better Continuous economic growth and better performance of banking sectorperformance of banking sector

Pending agenda:Pending agenda: From stabilization to further developmentFrom stabilization to further development

• Agriculture, small business, low income sectorsAgriculture, small business, low income sectors• Interest spreadsInterest spreads• Limits of deposit insurance fundLimits of deposit insurance fund

Role of the state : direct lending Vs. reducing Role of the state : direct lending Vs. reducing costs of transactions ??costs of transactions ??

BANKING SECTOR BANKING SECTOR REFORM REFORM

AND ITS ROLE IN AND ITS ROLE IN DEVELOPMENTDEVELOPMENT

The case of PeruThe case of Peru

April 19, 2006April 19, 2006Juan Carlos IzaguirreJuan Carlos Izaguirre


Wednesday, April 19th (3:00-4:15pm)

Marcela Guerrero Casas

Reparations: Key To Reconciliation In Peru

Guillermo Gonzales Arica

A Proposal To Reform The Presidential Houses In Latin America

Jonathan Gupton

Juan Carlos Izaguirre

The Colombian Development Experience: Trade-offs And Mixed Results

Banking Sector Reform In Peru


panel 5: political and economic reforms in latin america wednesday, april 19 th (3:00-4:15pm)

Documents

latin americaperception

economic reforms

presidential houses

reparations prichallenges

material reparations

reparations priestablished

symposium ondevelopment

presidential dutiesthe