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References

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1

This paper was prepared for the IMF-World Bank Annual Meetings seminar: “The Emergence of China and India: Lessons and Challenges for Latin America and the Caribbean.” The authors are grateful to Caroline Atkinson, Jose Fajgenbaum, Christopher Towe, Timothy Lane, James Gordon, Benedict Clements, Max Alier, Ayako Fujita, Gaston Gelos, Rishi Goyal, Roberto Benelli, and Lamin Leigh for their comments and suggestions. The authors would also like to thank Genevieve Lindow and Raj Mathur for their excellent research assistance.

4

Young (1994) focused in particular on the critical role of capital accumulation for growth among the newly-industrializing countries in Asia, noting the importance of a doubling of the investment-to-GDP ratio in Taiwan, a tripling in Korea, and quadrupling in Singapore during 1960–80.

5

See Westphal (1990) for an interesting discussion of the Korean case.

6

However, the substantive capital flight from Latin America since the 1980s, caused by macroeconomic and political instability, has resulted in considerable measurement problems regarding private sector savings.

7

Cole also finds that differences in human capital has not been a determinant of Latin America’s weak productivity.

8

The World Bank (1993) documents the progress that many of the Asian economies achieved in alleviating poverty since the 1960s. For example, by 1987, the percent of the population below the poverty line in Malaysia was 14 percent, down from 37 percent in 1973.

9

“Output Volatility in Emerging Market and Developing Countries,” Chapter II, World Economic Outlook, (April 2005).

11

Discretionary fiscal policy is defined as those changes in fiscal policy that are implemented for reasons other than current macroeconomic conditions or as a result of automatic stabilizers. The volatility of discretionary fiscal policy is measured as the standard deviation of the residuals of a regression of government real expenditures on several control variables, including inflation.

13

Echeverry, Ferguson, and Querubin (2004) discuss and present evidence of budget rigidities in Colombia.

14

Kaminsky, Reinhart, and Vegh correlate the cyclical components (based on the Hodrick-Prescott filter) of real government spending and GDP growth. A positive correlation is evidence of a procyclical fiscal policy.

15

Sahay and Goyal (2006) stress the difficulty in finding good measures of monetary policy instability, as well documented in the literature. The effect of exchange rate changes on growth is far from obvious: the frequency and intensity of exchange rate regime changes could be abrupt and unexpected, with significant adverse impact on uncertainty and growth, or could be an orderly response to shocks, with positive consequences for growth.

16

IMF research suggests that emerging market economies experiencing currency crises typically suffer cumulative output losses of about 15 percent. However, when a currency crisis is coupled with a banking crisis, the cumulative output loss is closer to 28 percent (see Box 3.3, World Economic Outlook, April 2002).

17

Blazquez-Lidoy and others (2006) stress the importance of reforms to boost infrastructure to preserve Latin America’s comparative advantage amid China’s increasing global trade influence.

18

IMF, Global Financial Stability Report, various issues.

19

Singh (2006b) notes that the debate on how best to ensure that macroeconomic stability becomes entrenched in the region is greatly facilitated with a shared goal of macroeconomic stability. In this regard, the region’s policymakers will need much agility and domestic political support in keeping inflation low and their macroeconomies stable in the period ahead, given likely tests from the global environment.

Sustaining Latin America's Resurgence: Some Historical Perspectives
Author: Mr. Anoop Singh and Mr. Martin D. Cerisola