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Productivity Spillovers through Trade Integration in Central America
Get PDFCentral America is a highly trade-integrated region. However, there has been little analysis of the effects such integration has had on macroeconomic aggregates. This study explores how spillovers from country-specific productivity shocks would spread across the countries that comprise the region. To do so, it employs a computable general equilibrium model calibrated to replicate the bilateral trade relationships within the region. As expected, the results show that countries that are more integrated within it would benefit more from idiosyncratic positive productivity shocks. In addition, the analysis enables the identification of spillovers across countries through the trade channel and estimates the beneficial effect of economic integration on economic growth compared to that of autarky
State Monopolies, Redistribution, and Productivity: Rethinking Ecuador’s Growth Constraints
Get PDFEcuador\u27s economic performance has lagged behind its potential and the broader Latin American region since 2010. Despite rising public debt and financial support from international institutions, Ecuador\u27s economic growth remains stagnant. This paper seeks to characterize the key structural factors impeding Ecuador\u27s economic growth and identify policies that could enhance it. We develop an analytical model framed within the Melitz (2003) framework to examine the implications of a state-controlled monopoly over extractive export-driven industries and the redistributive mechanisms that sustain low-productivity firms. Our findings indicate that redistribution policies sustain inefficient firms, hinder productivity growth, and entrench political incentives that perpetuate economic stagnation. This study contributes to the broader literature on state-owned monopolies and economic growth by illustrating the specific challenges faced by Ecuador and offering insights into policy reforms necessary to break the cycle of stagnation
Productivity and Market Power: The Case of Manufacturing Firms of Peru 2002-2019
Get PDFThis paper uses seven standard market power indicators (price-cost margin, and six drawn upon the production approach) to estimate the effect market power on the rate of change of total factor productivity for a sample of formal manufacturing firms of Peru for the period 2002-2019. After applying exogeneity tests and implementing panel data with fixed effects instrumental variable method, the results are not clear about the causal relationship between market power and firms\u27 TFP. However, when the Double-Debiased machine learning (DML) causal method is applied for fixed effects panel data with and without instruments, firms market power robustly seems not to affect their respective total factor productivity regardless of the market power indicators and instruments used. The paper also presents four examples which are consistent with this causal result suggesting that the relationship between market power and productivity needs to be analyzed on a case-by-case basis considering the product development of sectors, the influence and activities of firms and economic groups in the domestic economy and foreign markets, and the level of development of the country\u27s productive structure
The Performance of Artificial Intelligence in the Use of Indigenous American Languages
Get PDFThis publication analyzes the performance of artificial intelligence (AI) models when interacting in Indigenous American languages. The study evaluates seven representative languages from Latin America using five different language models, identifying a significant performance gap compared to major languages such as Spanish or Catalan. Through methodologies like the Multidimensional Quality Metrics (MQM) and the Multi-Task Language Understanding (MMLU), the report measures the linguistic, executive, and behavioral performance of the models, revealing significant limitations in comprehension, expression, and cultural adaptation. Additionally, the report examines the scarcity of digital data and linguistic tools available in Indigenous languages, which limits the training of AI models. It presents 21 strategies to promote technological inclusion, ranging from the creation of international consortia to the promotion of hackathons and data collection initiatives. The document concludes with a clear action plan to reduce the technological gap and promote the fair and responsible use of AI in multilingual contexts. * The executive summary of this publication is available at: https://publications.iadb.org/en/executive-summary-performance-artificial-intelligence-use-indigenous-american-language
The Impact of Crime Perception on Public Transport Demand: Evidence from Six Latin American Capitals
No full textPublic urban transportation systems are essential for mitigating climate change, leading policymakers to intensify efforts to boost ridership. However, there is not much evidence showing up to what extent, in regions with high crime rates like Latin America, safety perception could limit these efforts. This paper studies the impact of crime and crime perception on public transport demand across six Latin American capitals. Using a sample of 5,160 participants, we conduct three preregistered experiments to quantify the impact of crime on public transport choices and policy preferences. In the first experiment, we estimate the willingness to pay for safety by offering participants a choice between buses with varying crime rates and fares. We find that users place a substantial premium (51% of the current bus ticket) on safer transport options. The second experiment explores the substitution effect between private and public transport, revealing that higher crime rates diminish the likelihood of choosing public transport, even when offered at a reduced fare. The third experiment examines how crime perception influences public support for different transport policies. Our results show that a higher crime perception shifts support toward crime reduction initiatives at the expense of service efficiency and environmental policies. These results highlight the need for policies that integrate safety improvements to increase public transport ridership and contribute to climate change mitigation
Tax Revolts and Sovereign Defaults
Get PDFPolitical crises often coincide with fiscal crises, with complex causal dynamics at play. We examine the interaction between tax revolts and sovereign risk using a quantitative structural model calibrated to Argentina. In the model, the government can be controlled by political parties with different preferences for redistribution. Households may opt to revolt in response to the fiscal decisions of the ruler. While revolts entail economic costs, they also increase the likelihood of political turnover. Our model mirrors the data by generating political crises concurrent with fiscal turmoil. Specifically, we find that our model aligns closely with the conditions observed during the Macri administration (2015-2019). We find that left-leaning parties are more prone to default upon entering office, while right-leaning parties issue more debt. Our framework explains the high deficits observed during the Macri administration as well as the sovereign default that occurred immediately after the left regained power
Evaluating the impact of Public-Private Partnerships Enabling Conditions on Infrastructure Development: Evidence from Latin America and the Caribbean
Get PDFThis paper investigates the impact of public-private partnership (PPP)-enabling conditions on infrastructure development in Latin America and the Caribbean (LAC). Using a unique longitudinal dataset, this study analyzes how institutional conditions in 26 LAC countries influenced PPP investment activity between 2009 and 2022. The findings indicate political and social will, along with institutional capacity, are significant predictors of PPP investment, while market reliability, transparency, governance mechanisms, and regulatory regimes, although important, are less impactful. These findings highlight the critical importance of political stability and strong institutional frameworks in driving PPP investment activity in the region
Impact Report 2025: Transforming for Scale and Impact
Get PDFThe Impact Report offers a fresh and accessible look at how the IDB Group is working to achieve impact across Latin America and the Caribbean. Formerly known as the Development Effectiveness Overview (DEO), the report offers insights about effective and novel approaches employed by the IDB Group comprising the IDB, IDB Invest, and IDB Lab to promote inclusive growth and sustainable development, in close collaboration with the public and private sectors. The 2025 edition puts a spotlight on infrastructure, showing how expanded access to water, sanitation, energy, and transportation is transforming communities. More than just a report, it serves as a gateway to the IDB Group\u27s broader efforts to ensure accountability, as well as track, evaluate, and learn from development results. It offers readers a clear view into what is working, what needs improvement, and how the Group continues striving to achieve meaningful impact across the region
An Approach to Teachers Digital Competency in Latin America
Get PDFIn a context of accelerated digital transformation and a persistent learning crisis, this report presents a regional overview of how teachers in Latin America perceive their digital competencies. Based on a self-assessment completed by more than 28,000 educators across six countries, the analysis provides key evidence to inform teacher training strategies in the region. The findings reveal that most teachers do not consider themselves to have reached a basic level of digital competence for teaching: only 27% report having basic skills in the pedagogical use of technology, 29% in digital citizenship, and 40% in professional development. The report also examines how individual characteristicssuch as age, gender, education level, technology training, and teaching areaare associated with self-reported digital competence. Younger teachers, men, those with postgraduate degrees, and those teaching STEM subjects tend to report higher levels of competence. Finally, the report underscores the need for continuous, contextualized, and practice-oriented teacher training that fosters peer collaboration. It aims to contribute to an equitable and sustainable educational transformation by placing teachers at the center of pedagogical innovation and equipping them with the tools to prepare active citizens ready to navigate the challenges and opportunities of the digital world
The Impact of an Educational Robot-based Intervention on Second-graders Computational Thinking Skills: The Experimental Evaluation of the Irûmi Program in Paraguay
Get PDFIn this article, we present the impact evaluation of Irûmi , an educational robot -based intervention aimed at developing second -grade students\u27 computational thinking (CT) skills in Paraguay. Our results indicate that the program had an effect of 0.09 standard deviations on the students\u27 CT skills, focusing on abilities such as abstraction, algorithmic thinking, and evaluation. These findings suggest that with age - appropriate instructional design, very young children could develop CT skills and, that smart devices and electronic toys can contribute to their development at early ages. Several mechanisms may explain these results. First, Irûmi increased the likelihood that teachers would use educational technology in the classroom, including devices not explicitly provided by the program. Second, the program contributed to the development of teachers CT skills, possibly due to the novelty of the curriculum and methodology in the Paraguayan context. Third, Irûmi may have increased teachers motivation to use technology, thereby strengthening their positive attitudes toward its integration into teaching. Beyond its effects on CT skills, Irûmi generated additional benefits for students. In particular, it increased preferences for science, technology, engi neering, and mathematics (STEM) -related toys and promoted greater gender flexibility regarding who can play with them, especially among girls. It also improved boys and girls attitudes toward technology. Our study contributes to the empirical literature by focusing on a middle -income country, using an experimental design with pre - and post -intervention measures, working with a large sample of students, and analyzing the impact on both students and teachers