2018

Working Paper- Link (English) - 2018

The economic challenges in the Caribbean are significantly linked to the region’s external vulnerability. This paper examines financial flow trends in the context of strengthening the region's resilience, focusing on vulnerability, fragility, and resilience-building. Vulnerability is seen as a structural variable influenced by geography and economic forces, while fragility is a process variable characterized by institutional shortcomings and resource shortages. Building resilience is the most challenging aspect, involving the generation of net fund inflows, maintaining competitiveness, and enhancing citizens' well-being. The paper assesses trends in international capital flows, including portfolio flows and foreign direct investment, and explores strategies to improve access to external financing. It highlights the role of private flows and access to international debt markets, noting that private portfolio flows, though volatile and limited, could be enhanced through innovative instruments like debt swaps and green bonds alongside increased cooperation. The paper concludes with strategies for building resilience in the face of external vulnerability and restricted financing, emphasizing the connection between resilience and competitiveness and the importance of integration and convergence to foster regional cooperation.

Working Paper- Link (English) - 2018

This report examines the history of sovereign credit ratings in Latin America and the Caribbean, the evolution of credit quality, and the relationship between credit rating changes and the cost of accessing external financing as reflected in sovereign debt spreads. From 2003 to 2011, there was an upward trend in credit quality, leading to a sharp compression of bond spreads. However, after peaking in 2011, credit quality improvements stalled, and since 2013, sovereign credit quality in the region has slowly deteriorated. Using an event study methodology to estimate the impact of credit rating changes on sovereign bond spreads over the past fifteen years, the report finds an asymmetric impact: downgrades have a larger effect (103 basis points) than upgrades (-27 basis points). This impact varies by subregion, with South America and Mexico experiencing the most significant effects, and by time period, with the greatest impact from downgrades occurring between 2008 and 2012 and the most downgrades between 2013 and 2017. The findings confirm that sovereign credit quality significantly influences the cost of accessing private external financing.

Working Paper - Link (English) - 2018

Since the early 2000s, Latin America has seen significant improvements in income distribution, a notable shift in a region historically marked by persistent inequality. Despite variations across countries, this decline in inequality is due to labor market developments and more progressive government transfers. However, economic growth has slowed, reducing the pace of progress. To regain momentum, public policies must be reexamined to transform productive structures, advance human capital, and create high-quality jobs. ECLAC emphasizes that equality should be central to development, showing that reducing inequality and economic growth are compatible. This paper reviews recent inequality trends, explanatory factors, and the limited redistributive capacity of the region's tax systems.

Book - Link (English) - 2018

Index numbers are an essential tool for synthesizing economic data, enabling the measurement of variables like a country’s economic growth or inflation rate, and facilitating international comparisons. Using different formulas can yield varied results, making comparisons invalid; thus, understanding these formulas is crucial. Harmonization and standardization of measurements by countries and international organizations are necessary. Although often linked to macroeconomics, the theoretical foundation of index numbers lies in microeconomics. Manuals from agencies like the UN, IMF, World Bank, ILO, Eurostat, and OECD disseminate recommended practices and microeconomic theory. This publication explores the relationship between price and volume indices and microeconomic theory, presenting recommended formulas for international comparisons.