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Begin New Search Publishing Institution Institute for Advanced Development Studies (INESAD) Author Carlos Gustavo Machicado

1. Productivity, Structural Change, and Latin American Development

Author:
Carlos Gustavo Machicado, Felix Rioja, and Antonio Saravia
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
We calibrate a simple neoclassical model of structural transformation to a set of Latin American countries and show that slow growth in agricultural productivity can substantially delay the development process and result in significant differences in per capita incomes. Some of our results indicate that low agricultural productivity delayed the beginning of the industrialization process in Paraguay and Bolivia by about 100 years compared to the leader of the group, Chile. The development process can be accelerated, however, by increasing productivity in the non-agricultural sector. In fact, in the long run, it is non-agricultural productivity what determines the speed of convergence. Improvements in non-agricultural productivity between 20% to over 100% would be required for the other Latin American countries in our set to significantly close the income gap with Chile by the end of the century.
Topic:
Agriculture, Manufacturing, Economic Development, and Productivity
Political Geography:
Latin America

2. Bureaucratic delay, local-level monitoring, and delivery of small infrastructure projects: Evidence from a field experiment in Bolivia

Author:
Carlos Gustavo Machicado and Monica Yanez-Pagans
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper examines bureaucratic delay within the allocation of small infrastructure projects by sub-municipal governments in Bolivia, and it presents a randomized field experiment designed to improve public service delivery by promoting voice, transparency, and accountability among grassroots organizations. The experiment consists of randomly providing sub-municipal governments with a mailing tracking system, which provides public officials and grassroots organizations realtime information about the processing of small infrastructure projects requests by sub-municipal governments. The objective of this intervention is twofold. First, is to facilitate the involvement of grassroots organizations in the process of reviewing, tracking, and monitoring small infrastructure project allocations. Second, is to explicitly alter the probability of detecting inefficient administrative practices within district councils and, therefore, to implicitly increase the expected cost of engaging in such practices among public officials. The findings of this paper suggest that monitoring tools that promote access to information by citizens might play a critical role in improving public service delivery outcomes. Yet, in settings where mechanisms of local accountability are subject to be captured by local elites or are weak, monitoring tools might have limited capacity to improve outcomes. In such settings, major transparency related reforms might be needed to improve public service delivery outcomes.
Topic:
Accountability, Transparency, Bureaucracy, and Monitoring
Political Geography:
South America and Bolivia

3. Employment and Labor Regulation: Evidence from Manufacturing Firms in Bolivia, 1988-2007

Author:
Beatriz Muriel and Carlos Gustavo Machicado
Publication Date:
10-2011
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper analyzes employment in Bolivian registered manufacturing firms during 1988 to 2007, establishing its relationship with labor regulation. Estimating job flows, we find that firms with high temporary worker rates (less labor regulation costs) are those with both higher job reallocation rates and higher net employment growth, and only they contributed to employment growth during the country economic downturn, 1998-1999. In addition, estimating demand functions, we find the following effects of recent changes in labor norms: i) the compulsory basic salary rise in 2006-2009 entailed costs in terms of job losses, 5.6 percent for production workers and 4.8 percent for non-production workers; iii) the major labor costs derived from the new pension law, enacted in 2010, decreased employment demand around 1 percent; and, iv) labor protection policies decreased production workers demand.
Topic:
History, Labor Issues, Employment, Regulation, Business, and Manufacturing
Political Geography:
South America and Bolivia

4. Public Expenditure Policy in Bolivia: Growth and Welfare

Author:
Carlos Gustavo Machicado, Paul Estrada, and Ximena Flores
Publication Date:
05-2010
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
It has been widely documented that fiscal policy can promote economic growth, when it is based on an efficient provision of pubic capital. But little work has been done, in Bolivia, in relation to the macroeconomic and sectoral impacts of increasing public investment in infrastructure. This paper develops a Dynamic Stochastic General Equilibrium (DSGE) model for a small open economy with five sectors: Non-tradable or services, importable or manufacturing, hydrocarbons, mining and agriculture. The model is parameterized and solved for the Bolivian economy and several interesting scenarios are simulated by changing government expenditures, taxes, country risk, Total Factor Productivity, effectiveness of public capital and terms of trade. This analysis is relevant for the Bolivian economy, because the government is using fiscal policy as one of its main tool to attack poverty and aims to put public investment as the foremost instruments to promote growth and welfare.
Topic:
Infrastructure, Economic Growth, Fiscal Policy, and Public Investment
Political Geography:
South America and Bolivia

5. Effects of the Global Financial and Economic Crisis on the Bolivian Economy: A CGE Approach

Author:
Martin Cicowiez and Carlos Gustavo Machicado
Publication Date:
08-2010
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper analyses the impact of the Global Financial Crisis on the Bolivian economy. The PEP 1-1 Standard Model has been employed to analyze the effects of a reduction in (i) the world export prices of mining and agriculture, (ii) the world demand of textiles, and (iii) transfers to households (i.e., remittances) from abroad. The model has been calibrated to a new 2006 SAM for Bolivia. The households have been disaggregated according to their location (urban and rural) and ethnicity (indigenous and non-indigenous). The factors of production have been disaggregated into skilled and unskilled labor, capital, and natural resources. Not surprisingly, our results highlight the relevance of the decrease in the export price of natural gas in explaining the negative effects of the Global Financial Crisis.
Topic:
Financial Crisis, Gas, Economy, Forecast, and Simulation
Political Geography:
South America and Bolivia

6. Misallocation and Manufacturing TFP in the Market Liberalization Period of Bolivia

Author:
Carlos Gustavo Machicado and Juan Cristóbal Birbuet
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper analyzes productivity levels, dispersion and growth in the Bolivian Manufacturing Sector during the Market Liberalization Period: 1988-2001. These years are characterized first, by a period of macroeconomic stabilization and 1st Generation Reforms (1988-1993), second, by a period of privatization and 2nd Generation Reforms (1994-1997) and third, by a Post-reforms period (1998-2001). The 1st and 2nd Generation Reforms were framed in line with the Washington Consensus and their main objectives were to guarantee macroeconomic stability, to improve the efficiency and allocation of resources in the economy and to promote economic growth with fairness. We show that in contrast to what was expected, productivity in the manufacturing sector decreased steadily. We compute Total Factor Productivity (TFP), for the first time, using firm-level data and in addition we break down this measure in productivity per se and resource misallocation. We find that both issues contributed to the decline in productivity and if resource misallocation were eliminated, the gains in productivity would have been in the order of 60 percent, but the trend of productivity along time would have been the same, which means that there are also structural problems that affect productivity in Bolivia. In addition, we evaluate TFP considering exporting firms, size of firms, age of firms and geographical location.
Topic:
Markets, Macroeconomics, Manufacturing, and Liberalization
Political Geography:
South America and Bolivia

7. Technological Progress and Productivity in the Quinoa Sector

Author:
Juan Cristóbal Birbuet and Carlos Gustavo Machicado
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The main objective of this case study is to analyze the effect that a significant technological innovation in quinoa processing has had on the productivity of companies devoted to this activity and the impact of such an innovation on the growth and organization of the quinoa cluster in Bolivia, and its possible effects on the future. The study will explain how the boost engendered by technological innovation in quinoa processing has triggered a series of events that have allowed the establishment of an ambitious development program. The sector’s main companies and producer associations are part of this program, which is called the “Quinoa Alliance.” The program has become a unique opportunity for agro-industrial development in the Bolivian Altiplano, so far characterized by subsistence agriculture.
Topic:
Science and Technology, Economic Growth, Productivity, and Quinoa
Political Geography:
South America and Bolivia

8. Understanding Productivity Levels, Dispersion and Growth in the Leather Shoe Industry: Effects of Size and Informality

Author:
Juan Cristóbal Birbuet and Carlos Gustavo Machicado
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
In this case study performed on the industrial sub-sector of manufacture of leather shoes in Bolivia, we use the Hsieh and Klenow model (2008) to determine the differences between productivity of larger and formal companies and productivity of smaller and informal companies. Our results reveal that there are not many differences in terms of productivity among these types of companies. We think that informality is indeed the most important factor that contributes to this phenomenon. Apparently, the decrease in costs associated with informality compensates to some extend the economies of scale of formal companies with bigger dimensions and better technology. A notable fact in the shoe manufacturing industry is that it had experienced an atomization process in the last years. This trend is the consequence of a progressive creation of many small informal companies instead of the consolidation of this industry in medium and large formal companies. In a way, informality has contributed to this process. First, because it allows the survival of less productive companies that if they were not informal, they would have to bear costs that would not allow them to continue in business. Second, because informality creates strong incentives for employees to start their own business. In the other hand, many costs associated to formality discourage legally operating companies to employ more people, raise capital and growth.
Topic:
Economy, Industry, Productivity, and Informal Economy
Political Geography:
South America and Bolivia

9. Macroeconomic and Welfare Effects of Public Infrastructure Investment in Five Latin American Countries

Author:
Carlos Gustavo Machicado
Publication Date:
12-2007
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
It has been widely documented that investment in infrastructure is important for economic growth, but little work has been done in relation to the impact of infrastructure investment among other macroeconomic variables. This paper develops a Dynamic Stochastic General Equilibrium (DSGE) model of a small open economy to study the effects of public investment in infrastructure on output, consumption, private investment, trade balance and welfare. The model is parameterized and solved for five representative countries from The Initiative for the Integration of Regional Infrastructure in South America (IIRSA), which include: Bolivia, Chile, Brazil, Venezuela and Argentina. I also analyze the growth effects on GDP by increasing or decreasing the effectiveness index of infrastructure in each of these countries. Naturally output will grow at a larger rate, if infrastructure is handled with greater efficiency.
Topic:
Infrastructure, Economic Growth, Macroeconomics, Welfare, and Public Investment
Political Geography:
Brazil, Argentina, Latin America, Venezuela, Chile, and Bolivia

10. Liquidity Shocks and the Dollarization of a Banking System

Author:
Carlos Gustavo Machicado
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper shows how uncertainty about liquidity demand can lead to a high degree of dollarization in the banking system. I study a model where the demand for currency in each period is random, and where it is easier for banks to borrow in local currency in times of crisis than in dollars. Banks choose a portfolio composed of local currency, dollars, and real loans. Compared to the anticipated transactions demand for each currency, I show that the bank will hold a relatively large amount of dollars and a relatively small amount of local currency. I also show the existence of a dollarization multiplier : as the anticipated transactions demand for dollars increases, the dollarization of the banking sector increases more than proportionately
Topic:
Banking, Banking Crisis, Liquidity, and Dollarization
Political Geography:
Global Focus

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