Latin America’s Development Latin America s Development Challenges Lessons from the OECD Latin American Economic Outlook OECD Latin American Economic Outlook www.oecd.org/dev/leo www.oecd.org/dev/leo Jeff Dayton‐Johnson Senior Economist and Head of the Latin America and Caribbean Desk OECD Development Centre OECD Development Centre Bertelsmann Stiftung Berlin, 5 June 2008
Latin American market democracies matter for the OECD and its member countries. But though this Democratic consolidation the growth is not shared with the poor.
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Latin America’s DevelopmentLatin America s Development Challenges
Lessons from the OECD Latin American Economic OutlookOECD Latin American Economic Outlook
Development CentreDevelopment Centre Bridging OECD & emerging economies
• Membership of the Development CentreWith a Governing Board open to OECD non‐member countries, theDevelopment Centre provides a framework for dialogue andp p gexperience sharing with emerging regions all over the world.
• Four* Latin American countries are members of the Centre:– Mexico – Chile– Brazil
Colombia– Colombia
3
The The ContextContext Slower growth, not shared with the poor
2567
Sub-Saharan Africa20
25
67
Latin America
GD
P pby qui
GD
Pby qw
th
th
5
10
15
20
23456 Sub Saharan Africa
1994 2002 growth
5
10
15
20
123456 Latin America
1993 2003 change
per capita intile
P per capita uintile
ntile
ann
ual g
row
DP
per c
apita
le a
nnua
l gro
wP
per c
apita
0
5
01
Q1 Q2 Q3 Q4 Q5
0-101
Q1 Q2 Q3 Q4 Q5
Qui
nin
GD
Qui
nti
in G
DP
15
20
25
4567 Developing Asia
40
60
80
4567 OECD*
1990 2000 growthG
DP per cap
by quintile
GD
P per capby quintile
nnua
l gro
wth
r c
apita
ual g
row
th
apita
0
5
10
01234
1992 2002 change
0
20
40
0123
Q1 Q2 Q3 Q4 Q5
pita
pita Qui
ntile
an
in G
DP
pe
Qui
ntile
ann
uin
GD
P pe
r ca
4Source: OECD Development Centre, 2007. Based on IMF , Globalization and Inequality, 2007. OECD* includes: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, Korea, Netherlands, Norway, Singapore, Spain,
Sweden, UK, US.
Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q5
The The ContextContext Democratic consolidation
Uruguay
Venezuela60
70
man
ce
Argentina
Chile
Costa RicaDomincan Republic
MexicoPanama
Venezuela
40
50
ratic Pe
rform
BoliviaBrazil
Colombia
El Salvador
GuatemalaHonduras
Mexico
Nicaragua
Panama
Peru
30
40
with Dem
ocr
Ecuador
Paraguay
Peru
10
20
atisfaction w
0
4.00 5.00 6.00 7.00 8.00 9.00 10.00
Sa
BTI Democratic Quality Index
5Source: Latinobarómetro (2007), Bertelsmann Transformation Index (2007)
11 P i R f Wh t B fit ?P i R f Wh t B fit ?11 Pension Reform: What Benefits?Pension Reform: What Benefits?
Telecommunications and DevelopmentTelecommunications and Development22 pp
33 China and India: Threats and OpportunitiesChina and India: Threats and Opportunities
44 Fiscal Policy: A Critical Tool for DevelopmentFiscal Policy: A Critical Tool for Development
6
Pension Pension ReformReform A mixed impact on national savings
Argentina Chile Colombia Mexico Peru
28
32
P (%
)
Mexico
Chile
20
24
Sav
ing
/ GD
P
MexicoColombia
ArgentinaArgentina
Peru
8
12
16
Chile
Colombia
Argentina
Peru
8
-2 -1 0 1 2 3 4 5 6 7 8
Years since start of reform
7
Source: OECD Development Centre (2007), based on World Bank Development Indicators.
Pension Pension ReformReform Development /deepening of financial markets
Pension Fund Assets as percentage of GDP, 2006
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
ChileBrazil
ColombiaPeru
ArgentinaMexico
HungaryCzech Rep.
Latin America
pEstoniaLatvia
United StatesUK
Canada
Other Emerging Economies
Ca adaJaponSpain
France
Advanced Economies
8Source: OECD Development Centre (2007), based on Global Pension Statistics database.
11 P i R f Wh t B fit ?P i R f Wh t B fit ?11 Pension Reform: What Benefits?Pension Reform: What Benefits?
Telecommunications and DevelopmentTelecommunications and Development22 pp
33 China and India: Threats and OpportunitiesChina and India: Threats and Opportunities
44 Fiscal Policy: A Critical Tool for DevelopmentFiscal Policy: A Critical Tool for Development
9
TelecomsTelecoms Latin America leads developing world in telecoms FDI
FDI in telecommunications, by region
7%
6%4% 3%
56%24%
7%
Latin America and CaribbeanCentral and Eastern EEuropeSouth East Asia
South Asia
Middle East and Northern AfricaSub-Saharan Africa
Source: OECD Development Centre, based on PPI Database, World Bank Source: Information and Communications for Development 2006,
10
Source: OECD Development Centre, based on PPI Database, World BankWorld Bank
Investment in telecommunications hasTelecomsTelecoms FDI‐led increase in connectivity
The number of telephone lines has increased by a factor of 10 in Latin America, in part because of foreign investment
Foreign Investment in Telecommunications and connectivity
Cumulative Foreign Investment in Telecommunications (in USD billion)
100
120
Telephones per 100 inhabitants
40
60
80
0
20
4
1990 1995 2000 2005
11
99 995 5
Source: OECD Development Centre, based on SEDLAC (2007) and IADB (2007) data.
TelecomsTelecoms Unequal distribution of benefits
Inequality is high: a quarter of poor households have a telephone at home, 3 times less than high‐income households
1
Proportion of the population with a telephone at home
Richest quintile Poorest quintile
0.6
0.8
1
0
0.2
0.4
0
Chi
le
Arg
entin
a
Bra
sil
Cos
ta
Ric
a
Méx
ico
Par
agua
y
Bol
ivia
Per
ú
Nic
arag
ua
Hai
tí
12Source: OECD Development Centre, based on SEDLAC surveys.
TelecomsTelecoms Limited contestability of markets
C t Ri
Index (Herfindahl-Hirschman) of concentration on the telephone marketTelephone lines, by segment