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AI from the Ground Up: Challenges and Opportunities in the Context of Latin America and the Caribbean
No full textThe exponential growth in computational capacity, along with the resulting decrease in costs, the digitalization of information, and the expansion of the Internet, have been key to making this technology accessible to governments and organizations across different economic sectors. Different businesses and entities in the energy, transport, water and sanitation, and solid waste sectors have recently started adopting AI-based solutions for missions and strategies to improve systems planning, optimize operations and maintenance of assets, reduce costs, and deliver better services. Creating value through AI is very important for countries, governments, and public and private organizations because the services provided by infrastructure sectors are critical for economic growth and the normal functioning of societies. This document offers recommendations and technical considerations to develop and adopt AI-based solutions in infrastructure sectors. These recommendations are based on global evidence, the experience of the IDB, and the lessons learned from the deployment of tools in Latin America and the Caribbean (LAC). The elaboration of this publication included 17 interviews with IDB technical teams and with clients and external actors experienced in developing and implementing solutions using emerging technologies and AI. The document includes as an annex a review of regulatory frameworks applicable to AI in LAC. The objective of the document is to provide conceptual and methodological approaches to leaders, policy-makers, project teams, public and private technical units, developers and other actors in the entrepreneurial ecosystem that help strengthen the design and development of solutions in the infrastructure sectors and to maximize the opportunities offered by AI in this area. The document concludes with recommendations to successfully develop and implement these solutions in LAC. The main recommendations include the following: (i) implement agile AI development and innovation methodologies and consider the use of Proof of Concept, prototypes, and Minimum Viable Products that are spaces for experimentation, learning, and feedback to improve solutions; (ii) define organizational schemes that facilitate the development and adoption of these solutions, as well as assess and ensure the existence of the skills necessary on the teams; (iii) understand the importance of data and their governance, and in doing so determine the data necessary, available sources, architecture, and the flow of these elements; (iv) identify and evaluate, starting in the design stage, the requirements for technological tools and data infrastructure to design solutions, especially for data storage and processing capacity; (v) define objective criteria to select the models to address the nature of the problem, the type and quality of the information, computational capacity, and performance objectives and explainability; and (vi) pay special attention to ethical, privacy, and security aspects from the initial design stages
Research Insights: Do the Economic Effects of Constitutions Depend on the Degree of Institutionalization?
No full textIf politics is conducted largely outside of formal arenas, political institutions may not play a very large role in determining policy outcomes. We propose a new index of institutionalization to capture how much policymaking takes place in formal arenas. We find that previous conclusions on the economic effects of constitutionally established majoritarian electoral systems and presidential forms of government are applicable only to countries with high levels of institutionalization
Ten Years Promoting Culture and Creativity: The IDBs Commitment to the Cultural and Creative Industries
No full textThis document summarizes the work carried out by the IDB in the field of creativity and culture over the last 10 years, and proposes challenges, opportunities and recommendations to outline possible paths that will allow us to move forward decisively in strengthening culture and creativity as a driving force for the economy of Latin America and the Caribbean
Approach Paper: Stocktaking of Private Finance Mobilization at the IDB Group
No full textThis approach paper defines the objective, scope, and methodology for the Office of Evaluation and Oversight\u27s (OVE) stocktaking of Private Finance Mobilization (PFM) at the Inter-American Development Bank Group (IDBG or the Group). This work is included in OVE\u27s 2022-2023 Work Program (document RE-574-1) to address the interest of the IDB and IDB Invest Executive Boards in exploring the Group\u27s experience of mobilizing private finance. This stocktaking will be delivered at a time when the IDBG and its shareholders are looking for innovative ways to mobilize additional financing to support Latin America and the Caribbean (LAC) and meet the Sustainable Development Goals (SDGs). Furthermore, this exercise takes place in a context where the IDBG is developing its new institutional strategy, and IDB Invest is preparing a capitalization proposal, both to be delivered to Governors in the 2024 Annual Meeting
Building Trust in State Actors: A Multi-Site Experiment with the Colombian National Police
Get PDFLow trust in state actors constrains state capacity, hindering growth and development. This paper studies how state actors can build public trust by improving the quality of their interactions with citizens. We first propose a mechanism linking improved interactions to public trust, defined as the belief that the state actor implements welfare-enhancing policies. Improved interactions lower the expected burden of engaging with the state actor, promoting compliance. This motivates citizens to believe compliance is worthwhile, increasing trust in the state actor. We then empirically assess the relationship between the quality of interactions and public trust in the Colombian National Police. We experimentally evaluate an intervention that retrains officers across five major cities in procedural justice principles such as fairness and respect while intensifying police-citizen interactions. The intervention was purposefully designed to be low-cost in terms of financial and human resources. We find that the intervention improved public trust, willingness-to-pay for police services, and citizens perceptions of fair treatment, suggesting low-cost interventions can help build trust between police and communities. We also find a limited impact on officers trust in citizens and their beliefs about citizens public trust, implying that institutional culture change may require more profound efforts
How families matter for understanding economic inequality
Get PDFIn this paper we discuss the importance of families for understanding economic inequality. Family structure can in principle be an amplifier or mitigator of economic inequality. We describe three channels on how families shape economic inequality. First, how people match to form families matters for inequality across families. Second, parental investments in children can amplify existing inequalities across generations. Third, inequality can exist even within families, and the economic environment can shape inequality in consumption and leisure between spouses. In this survey we describe these channels and discuss the related literature
BIDeconomics Guatemala: Landscape of Opportunities
No full textGuatemala has not succeeded in attracting sufficient investment to promote a more prosperous and inclusive society, despite having abundant resources and positive economic indicators. The country stands out among the economies in the region for its sustained economic growth, balanced fiscal accounts, credible monetary policy, and a strong external position. However, there have been few advancements in reducing social gaps. The lack of social and productive investment has been a key factor in this outcome, affecting access to basic services and limiting business growth. This document identifies the most significant opportunities for Guatemala\u27s development and proposes three pillars of investment: people, entrepreneurial fabric, and institutions
Employment and Living Conditions of the Population over 50 in Latin America
No full textThis document describes recent demographic, economic, and social trends of people 50 and older in Latin America. We analyze the labor profile of those generations who will face retirement over the next two decades to understand how likely it is to reduce the current gaps in coverage and sustainability of pensions. We explore the occupation profiles, contributions to social security, and their comparisons with previous generations. The document\u27s last section describes different inequality angles for this population, including income and access to public services
Multiplicity in Sovereign Default Models: Calvo Meets Cole-Kehoe
Get PDFThis paper proposes a model of sovereign default that features interest rate multiplicity driven by rollover risk. Our core mechanism shows that the possibility of a rollover crisis by itself can lead to high interest rates, which in turn reinforces the rollover risk.By exploiting complementarity between the traditional notions of slow- and fast-moving crises, our model generates a rich simulated dynamics that features frequent defaults and a volatile bond spread even in the absence of shocks to fundamentals. In the presence of risky income, our mechanism amplifies the dynamics of debt and spreads relative to model benchmarks where equilibrium multiplicity relies on the underlying shocks to income
The Role of Capital Markets in Funding MSMEs in Latin America and the Caribbean
No full textFacilitating access for MSMEs to capital markets, for example through the issuance of mini-bonds, is a key objective of policymakers and regulations in Latin America and the Caribbean. However, there is no systematic evidence regarding the development of these markets in the region, nor of the obstacles to their growth. This document reports on the results of eight case studies and a large survey of regulators and market participants in the region. Some key conclusions emerge. First, these instruments must be specifically tailored to MSMEs, providing more flexibility than those offered to larger companies. This study finds that governments can play a fundamental role in achieving this as well as in increasing trust in new forms of MSME funding through capital markets. Incentives, such as guarantees or tax incentives, can be offered to facilitate faster adoption. The study also finds that regulation must be tailored and proportional to the nature of smaller firms, or they may quickly become discouraged and disengaged, causing the markets to fail. Also, governments that invest more in the financial education of MSMEs achieve better outcomes. On the industry side, capital markets whose exchanges support investors in the screening and risk assessment of issuers and build a strong credit culture are more successful. Finally, the study finds that having a healthy relationship among regulators, exchanges, and fintechs increases opportunities for MSMEs and accelerates the development of technologies that can support faster and more effective deployment of funds through capital markets