In the 1990s, Latin American banking sectors experienced an accelerated process of concentration and foreign penetration that prompted diverse views regarding its implications for the competitive ...behavior of banks and the financial stability of the system. In this paper, we examine these issues exploiting a rich bank-level database for eight Latin American countries. We find that, while increased concentration did not weaken banking competition within the region, foreign penetration appears to have led to a less competitive industry. Moreover, we find that bank risk has been negatively associated with competition which, coupled with the previous finding, explains the positive link between banking sector stability and foreign penetration revealed by the data.
Recent literature has emphasized the importance of transport costs and infrastructure in explaining trade, access to markets, and increases in per capita income. For most Latin American countries, ...transport costs are a greater barrier to U.S. markets than import tariffs. We investigate the determinants of shipping costs to the United States with a large database of more than 300,000 observations per year on shipments of products aggregated at six-digit Harmonized System (HS) level from different ports around the world. Distance, volumes, and product characteristics all matter. In addition, we find that port efficiency is an important determinant of shipping costs. Improving port efficiency from the 25th to the 75th percentile reduces shipping costs by 12%. Bad ports are equivalent to being 60% farther away from markets for the average country. Inefficient ports also increase handling costs, which are one of the components of shipping costs. In turn, factors explaining variations in port efficiency include excessive regulation, the prevalence of organized crime, and the general condition of the country's infrastructure. Reductions in country inefficiencies, associated to transport costs, from the 25th to 75th percentiles imply an increase in bilateral trade of around 25%.
(Antràs, 2020) argues that whereas in the 1990s it was profitable to fragment production processes, now computerization allows the automation of human tasks, reduces labor costs, and substitutes the ...offshoring of certain activities. We analyze imports from six developed countries sourced from developing countries to study this hypothesis. We find a decline in imports of products from sectors characterized by low wages and routine tasks, therefore at risk of automation. Moreover, imports rose within sectors known for having a significant potential for offshoring until 2001, followed by a subsequent decline. Labor-replacing tasks technologies are changing the comparative advantages of developing economies.
•Offshoring was profitable in the 90s, but now computerization and automation are.•In developed countries, the imports of routine-task products have declined.•The labor-replacing technologies are changing developing countries’ comparative advantages.
Microeconomic flexibility is at the core of economic growth in modern market economies because it facilitates the process of creative-destruction. The main reason why this process is not infinitely ...fast, is the presence of adjustment costs, some of them technological, others institutional. Chief among the latter is labor market regulation. While few economists object to the hypothesis that labor market regulation hinders the process of creative-destruction, its empirical support is limited. In this paper we revisit this hypothesis, using a new sectoral panel for 60 countries and a methodology suitable for such a panel. We find that job security regulation clearly hampers the creative-destruction process, especially in countries where regulations are likely to be enforced. Moving from the 20th to the 80th percentile in job security, in countries with strong rule of law, cuts the annual speed of adjustment to shocks by a third while shaving off about 1% from annual productivity growth. The same movement has negligible effects in countries with weak rule of law.
The relevance of transport costs has increased as liberalization continues to reduce artificial barriers to trade. Is it worthwhile to implement policies designed to increase competition in transport ...markets? Focusing on air transport, this paper quantifies the effects of liberalization of air cargo markets on transport costs. Between 1990 and 2003, the United States implemented a series of Open Skies Agreements, providing a unique opportunity to assess the effect that a change in the competition regime has on prices. In our sample, Open Skies Agreements reduce air transport costs by 9% and increase by 7% the share of imports arriving by air. Those results hold for developed and upper-middle-income developing countries but for lower-middle-income and low-income developing countries Open Skies Agreements do not reduce air transport costs.
This paper analyzes the Covid-19 pandemic impact of the global process of automation on employment in a developing economy. This is particularly interesting because developing economies ...characteristics, such as having larger informal sectors and weaker social safety nets, shapes the impact of automation on labor markets. We show that occupations with a higher risk of automation exhibit the most significant employment contraction. More specifically, we find that one standard deviation higher in sectoral share of employment in occupations at risk of automation (OaRA) implied around 7% less employment on average between the last quarter of 2019 and the first quarter of 2021. The effect on informal employees is three times more in comparison to formal employees, and the estimation for self-employed workers is not statistically significant. We also find that employees in sector with relatively low compared to high wages, both vis-à-vis the US, exhibit a 20% smaller reaction on employment due to the pandemic restrictions. We do not find robust evidence showing that the employment contraction has been larger among female workers or in jobs with higher at-work physical proximity, but we do find a positive relationship related to the capacity of working remotely.
This paper examines the determinants of waterborne transport costs, with particular emphasis on the efficiency at port level. Its main contribution is (1) to generate statistically quantifiable ...measures of port efficiency from a survey of Latin American common user ports, and (2) to estimate a model of waterborne transport costs, including the previously generated port efficiency measures as explanatory variables. In order to incorporate different port efficiency measures from the survey, we use principal component analysis (PCA). Our estimations show that the specified variables in the model explain a great proportion of the change in waterborne transport costs. With regard to port efficiency, the result is especially important for one of the port efficiency measures obtained through PCA with an estimated elasticity equivalent to that of distance. Other explanatory variables which show to be statistically significant are the monthly liner service availability, distance, and the goods' value per ton. The conclusions are relevant for policy makers as they show and quantify that port efficiency is a relevant determinant of a country's competitiveness – and in this respect, there still exist big differences among Latin American countries. Unlike most other relevant variables, port efficiency can be influenced by public policies. Maritime Economics & Logistics (2003) 5, 199–218. doi:10.1057/palgrave.mel.9100073
This paper uses a new dataset to reassess the relationship between bank ownership and bank performance, providing separate estimations for developing and industrial countries. It finds that ...state-owned banks located in developing countries tend to have lower profitability and higher costs than their private counterparts, and that the opposite is true for foreign-owned banks. The paper finds no strong correlation between ownership and performance for banks located in industrial countries. Next, in order to test whether the differential in performance between public and private banks is driven by political considerations, the paper checks whether this differential widens during election years; it finds strong support for this hypothesis.
This paper checks whether state-ownership of banks is correlated with lending behavior over the business cycle and finds that their lending is less responsive to macroeconomic shocks than the lending ...of private banks.
This article studies the relationship between creditor protection and credit responses to macroeconomic shocks. Using a data set on legal determinants of finance in a panel of data on aggregate ...credit growth for 79 countries during 1990-2004, it is shown that credit is more responsive to external shocks in countries with weak legal creditor protection and weak enforcement. The results are statistically and economically significant and robust to alternative measures of creditor protection, to the inclusion of variables that reflect different stages of economic development, to the restriction of the sample to only developing economies, to the controls for systemic crises, to alternative shock measures, and to vector autoregressive specifications.
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