Front Matter

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Author(s):
International Monetary Fund. Western Hemisphere Dept.
Published Date:
July 2018
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    Paving the Way to Growth and Prosperity in Central America, Panama, and the Dominican Republic

    Editors

    Kimberly Beaton, Roberto Garcia-Saltos, and Lorenzo Figliuoli

    INTERNATIONAL MONETARY FUND

    Note to Readers

    This is an excerpt from Paving the Way to Growth and Prosperity in Central America, Panama, and the Dominican Republic edited by Kimberly Beaton, Roberto Garcia Saltos, and Lorenzo Figliuoli.

    Over the past three decades, countries in Central America, Panama, and the Dominican Republic have experienced sustained economic transformation. The region has moved away from its rural and agricultural past to a modern and urban present and has significantly integrated its economies regionally and globally. Many factors have shaped the region’s economic performance and are expected to contribute to its future development.

    The book aims to foster policy dialogue and contribute to the efforts to address the region’s unique challenges. The first part looks at the region’s growth with a view to understanding how structural determinants have contributed to the region’s uneven gains and the resulting priorities to strengthen the foundations of growth. The second part of the book highlights the importance of addressing the region’s fiscal challenges and supporting growth and improved social outcomes. Finally, the third part of the book emphasizes the importance of a supportive financial sector for growth, including through financial inclusion and development.

    This excerpt is taken from uncorrected page proofs. Please check quotations and attributions against the final published volume.

    Paving the Way to Growth and Prosperity in Central America, Panama, and the Dominican Republic

    Edited by Kimberly Beaton, Roberto Garcia Saltos, and Lorenzo Figliuoli

    ISBN: 978-1-48435-384-4

    Pub. Date: Fall 2018

    Formats: Digital; Paperback, 6x9 in., pp..

    Price: US$25.00

    For additional information on this book, please contact:

    International Monetary Fund, IMF Publications

    P.O. Box 92780, Washington, DC 20090, U.S.A.

    Tel: (202) 623–7430 ♦ Fax: (202) 623–7201

    Email: publications@imf.org

    www.bookstore.imf.org

    © 2018 International Monetary Fund

    Contents

    • Foreword

    • Contributors

    • 1 Removing Obstacles and Creating Opportunities for Sustained Growth in CAPDR

      • Kimberly Beaton, Lorenzo Figliuoli, Roberto Garcia-Saltos, Iulia Teodoru

    • Part I: The Foundation of Growth

    • 2 The Determinants of Potential Growth in CAPDR

      • Roberto Garcia-Saltos, Iulia Teodoru

    • 3 Increasing Female Labor Force Participation to Foster Growth in CAPDR

      • Anna Ivanova, Jaume Puig-Forne, Victoria Valente, Joyce Wong

    • 4 Migration and Remittances in CAPDR

      • Kimberly Beaton, Metodij Hadzi-Vaskov and Bogdan Lissovolik

    • 5 Trade Integration in CAPDR

      • Kimberly Beaton, Xiaodan Ding, Metodij Hadzi-Vaskov, Rosalind Mowatt

    • 6 Crime and Punishment in CAPDR

      • Ana Lariau, Dmitry Plotnikov, Joyce Wong

    • Part II: Fiscal Policy Challenges to Growth

    • 7 The Efficiency of Social Spending in CAPDR: A Benchmarking Approach

      • Javier Kapsoli, Iulia Teodoru

    • 8 Long-term Fiscal Costs of Population Aging in CAPDR

      • Jaume Puig-Forne

    • 9 Fiscal Policy Reforms and Inequality: Selected Experiences in CAPDR

      • Roberto Garcia-Saltos, Valentina Flamini

    • 10 Recent Experiences with Fiscal Responsibility Frameworks in CAPDR

      • Metodij Hadzi-Vaskov, Bogdan Lissovolik, Javier Kapsoli

    • Part III: Monetary and Financial Sector Policies to Support Growth

    • 11 Improving Monetary Policy Frameworks and Enhancing the Effectiveness of Monetary Policy

      • Prachi Mishra, Rogelio Morales

    • 12 Financial Development and Inclusion in CAPDR

      • Joyce Wong

    • 13 Safeguarding Financial Stability in CAPDR: The Role of Macroprudential Policy

      • Kimberly Beaton, Mario Dehesa, Fernando Delgado, Xiaodan Ding

    • 14 The Credit Cycle in CAPDR

      • Valentina Flamini, Pierluigi Bologna, Rasool Zandvakil, Fabio Di Vittorio

    Foreword

    Over the past three decades, countries in Central America, Panama, and the Dominican Republic have experienced sustained economic transformation. The region has moved away from its rural and agricultural societies of the past to modern urban ones and has made significant progress integrating its economies regionally and with the rest of the world. Yet, relative to other regions, growth performance overall has been subpar, with much of the weakness concentrated in the Northern Triangle countries—El Salvador, Guatemala, and Honduras—as well as in Nicaragua, while Costa Rica, the Dominican Republic, and Panama have outperformed their CAPDR peers. In part, the divergent growth performances may be attributed to differences in the structural challenges faced across the region. To varying degrees, the region broadly shares structural impediments from infrastructure and education gaps and large informal sectors as well as limited fiscal space and low financial intermediation and inclusion. Nevertheless, disproportionately high crime in the Northern Triangle countries has contributed to outward migration and undermined these countries’ growth prospects relative to the rest of the region.

    It is my pleasure to be part of this effort to disseminate the analytical work on Central America, Panama, and the Dominican Republic conducted by the IMF’s Western Hemisphere Department to assess how the region can overcome its obstacles and achieve higher and more inclusive growth. This book is timely and important in many respects. With a primary focus on how to achieve higher and more inclusive growth, it provides a rich analysis of key structural, fiscal, and financial impediments to growth. The chapters synthesize a substantial amount of analytical work on highly topical issues, with the conclusions providing important insight into the divergent growth outcomes of countries in the region and informing their respective priorities to strengthen the foundations of growth and improve social outcomes.

    This book is an important platform to further our close engagement and policy dialogue with our members in the region. I hope that it will foster a productive policy dialogue on the region’s unique economic challenges and stimulate further research to pave the way to sustained growth and prosperity.

    Mitsuhiro Furusawa

    Deputy Managing Director

    International Monetary Fund

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