van Til, Almekinders,, Kawakami,, Matovu,, and Yuguda
This Selected Issues paper and Statistical Appendix analyzes economic developments in Botswana during the 1990s. The paper analyzes the growth process during 1982/83–1996/97 by assessing the contribution of capital, labor, and technological progress, both at the macroeconomic and sectoral levels. The paper examines the diversification initiatives undertaken by Botswana and the extent to which diversification and employment creation have been achieved. It provides the background to the unemployment problem, and summarizes Botswana’s policy initiatives to diversify and create sustainable employment.
What about the flow of well-educated people from less developed countries to richer countries? The author puts forth the view that—sometimes at least—it alleviates social and economic stresses in some of the “losing” countries.
The cornerstone of Chile’s impressive fiscal performance and strong fiscal system has been its structural balance rule. It has helped to insulate public spending from copper price cycles and improve the government’s net financial position. Chile should adopt a full-fledged medium-term fiscal framework to improve fiscal planning and provide a framework for addressing temporary deviations from the fiscal rule. Publishing additional fiscal indicators in the budget, such as the non-copper structural balance, could provide more comprehensive information on the impact of fiscal policy on the domestic demand.
Unemployment in South Africa is decomposed into a cyclical and a structural component. The estimates suggest that unemployment is largely structural. Alternative explanations for the persistence of deviations of market wages from full-employment levels are examined. Three models that are empirically capable of generating the observed wage and employment gaps are presented. The predictions of the models for wages and employment are discussed in light of recent and prospective developments in South Africa. [JEL E24, J23, J31]
This Selected Issues paper analyzes macroeconomic fluctuations in the Eastern Caribbean Currency Union (ECCU). The paper describes data, along with the estimation technique used to ensure stationarity of the data. The empirical regularities of macroeconomic fluctuations in the ECCU are described, examining the relationship between a set of macroeconomic time series and domestic output, for each of the six IMF members of the ECCU. The paper also explores the determinants of macroeconomic volatility in the ECCU.
This paper draws on existing empirical literature and an original theoretical model to argue that globalization and skill supply affect the extent to which technology adoption in developing countries favors skilled workers. Developing countries are experiencing technical change that is skill-biased because skill-biased technologies are becoming relatively cheaper. Increased skill supply further biases technical change in favor of skilled labor. Free trade induces technology that favors skilled workers in skill-abundant developing countries and that favors unskilled workers in skill-scarce developing countries, and therefore amplifies the predicted wage effects of trade liberalization. These features aid our understanding of the observed rises in inequality within developing countries and the absence of a significant downward effect of expanded educational attainment on skill premia. They also help account for the large and differential effects of trade liberalization on inequality. These findings are pertinent for the Middle East and North Africa because of its recent increase in trade openness and remarkable rise in educational attainment.
Mr. Dmitry Gershenson, Mr. Albert Jaeger, and Mr. Subir Lall
Broader measures of labor underutilization suggest that labor slack increased significantly more than indicated by the unemployment rate, while the brunt of labor shedding fell on the lower skilled. These adverse labor market trends were mainly a legacy of the pre-2011 buildup of macroeconomic flow and stock imbalances. Under present growth projections and policies, it is unlikely that job creation will be sufficient to absorb the slack over the medium term. To support job creation for the lower skilled, structural reforms should be complemented by a prudent minimum wage policy, measures that increase the limited pool of managerial skills, and a more inclusive and transparent social dialogue.