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241. Social Insurance Regimes: crises and 'reform' in the Argentine and Brazil, since c. 1900

Author:
Colin Lewis and Peter Lloyd-Sherlock
Publication Date:
01-2002
Content Type:
Working Paper
Abstract:
The paper examines the structural and organisational problems of social insurance systems in Brazil and the Argentine in order to illuminate current debates about pension 'reform'. Much of the present discussion depicts social insurance 'crisis' as a modern phenomenon. Similarly, preoccupations about the macroeconomic objectives of reform - profitable pension funds as an adjunct to capital market deepening, about sustainability - the financial viability of systems, and about equity and coverage, are often assumed to be peculiar to the late twentieth century. The papers stresses the generational (or cyclical) nature of crises that have plagued social insurance regimes in both countries. It also identifies what may be learnt from differences, as well as similarities, between the two systems - not least the relatively larger historic role the private sector and earlier substantive provision for rural workers in Brazil. Following an appraisal of different 'models' (individual 'capitalised' accounts versus pay-as-you-go schemes and monopolistic state systems versus pluralistic/competitive arrangements), the paper concludes with an evaluation of the administrative and financial stability of current schemes.
Topic:
Economics, Government, and Industrial Policy
Political Geography:
Brazil, Argentina, South America, and Latin America

242. The Argentine Implosion

Author:
Luigi Manzetti
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
In December 2001, Argentina recorded the world's largest default ever, as it failed to honor payments on its US$132 billion foreign debt. Since then, five presidents have been in power, the Argentine peso has been devalued by 120 percent, and the banking system has virtually collapsed, dragging the economy into a depression. The gross domestic product (GDP) contracted 16.3 percent in the first quarter of 2002. Argentina's per capita income has become one of the worst in Latin America, and, as a result, more than one-third of its people live under the poverty line. 1 Argentines' confidence in their elected officials has disappeared. By most accounts, the country has literally imploded to a degree that has no precedent in Latin America's contemporary history. This is particularly bewildering, considering that only 10 years ago Argentina was hailed around the world as a model of successful economic reforms, with standards of living that were not only the highest in the region but comparable to those of some southern European countries. How could Argentina go from role model to international outcast so quickly? Some place the blame on external shocks created by the financial crises in Mexico (1995), Indonesia (1997), Thailand (1998), and Russia (1998). Others say the cause of the problem was misguided policy advice from the International Monetary Fund (Stiglitz 2002). Yet, most analyses ascribe much of the trouble to the Convertibility Law's fixed exchange rate policy adopted in 1991.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Russia, Indonesia, Argentina, South America, Latin America, Mexico, and Thailand

243. The Effectiveness of Special Interventions in Latin American Public Primary Schools

Author:
Joan B. Anderson
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
In pursuit of improved quality and more equity in education, public primary schools in Latin America have utilized several compensatory educational policies that include special interventions such as food aid programs, distribution of free textbooks, classroom libraries, in-service teacher training, extra classes and extra school sessions, tutors and mentors, and scholarships. Using data on children and schools in Argentina, Brazil, Chile, and Mexico, this paper presents the results of cross-country, empirical estimates of the effects of these interventions on language and math achievement and on the likelihood of promotion, both at the school level and at the level of individual children. Language and math achievement was measured by scores on UNESCO-developed language and math examinations administered to each of the 2,048 children in the sample. In addition, the paper addresses whether a particular intervention is equally effective in poor and non-poor environments and whether these compensatory interventions in fact target those who need them most. Empirical findings suggest that the most effective programs are classroom libraries, distribution of textbooks, distribution of food, and teacher training. For programs to be compensatory, the research indicates that better targeting of scarce resources toward low-income schools and children is needed
Topic:
Development, Education, and Government
Political Geography:
Brazil, Argentina, Latin America, Mexico, and Chile

244. Economic Development and Asymmetries in MERCOSUR: The Prospects of a MERCOSUR Regional Development Fund

Author:
Fernando Masi and Amaury Hoste
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
The signature of the Treaty of Asunción on March 26, 1991, by Argentina, Brazil, Paraguay and Uruguay initiated the creation of a common market called the Mercado Común del Sur (Southern Common Market – MERCOSUR). The signatory governments hoped that the economic growth subsequent to the creation of this organization would contribute to a better convergence among them.
Topic:
Development and International Organization
Political Geography:
Brazil and Argentina

245. Argentina — Beleaguered Banks

Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the impact of the economic crisis on the Argentine banking sector. The collapse of the peso-dollar peg dealt a serious blow to the already weakened Argentine banking system, which now faces a significant restructuring process.
Topic:
International Organization, International Political Economy, and International Trade and Finance
Political Geography:
Argentina and Latin America

246. Financial Regulation and Supervision in Emerging Markets. The Experience of Latin America since the Tequila Crisis

Author:
Barbara Stallings and Rogerio Studart
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper deals with changes in the regulation and supervision of the Latin American financial sector in the aftermath of the 'Tequila Crisis' of 1994–95. While it finds that both have improved, regulation and supervision cannot resolve all problems; good macroeconomic policy and performance are essential complements. This is especially true because of the procyclical nature of financial activity. The paper presents both regional data for Latin America, contrasting it with other emerging markets, and four country case studies (Argentina, Brazil, Chile, and Mexico). The latter show how individual country characteristics and experiences affect the operation of the financial systems. We close with some policy recommendations.
Topic:
Economics, Emerging Markets, and Government
Political Geography:
Brazil, Argentina, South America, Latin America, North America, Mexico, and Chile

247. How Optimal are the Extremes? Latin American Exchange Rate Policies During the Asian Crisis

Author:
Ricardo Ffrench-Davis and Guillermo Larraín
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
During the Asian crisis, intermediate exchange rate regimes vanished. It has been argued that those regimes were no longer useful and only the extremes remained valid. The paper analyses three foreign exchange regimes: Argentina (pegged), Chile (band) and Mexico (float). The Argentinean currency board delivered low financial volatility while it was credible, but even then it displayed high real volatility. Mexican float performed well in periods of instability isolating the real sector. The Chilean band delivered a mixed outcome as compared to Argentina and Mexico. This is linked apparently to a loss in the band's credibility, associated to policy mismanagement and an over-appreciation in the biennium before the crisis. Optimal exchange rate regimes vary across time and the conjuncture. Exit strategies are part of the election of the optimal system, including a flexible policy package rather than a single rigid policy tool.
Topic:
Development and International Trade and Finance
Political Geography:
Asia, Argentina, South America, Latin America, Mexico, and Chile

248. Ratings since the Asian Crisis

Author:
Helmut Reisen
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The increased importance of rating agencies for emerging-market finance has brought their work to the attention of a wider group of observers - and under criticism. This paper evaluates whether the importance of ratings for developing-country finance has changed since the Asian Crisis and whether rating agencies have modified the determinants for their rating decisions. It also provides an analysis on recent suggestions by the Basel Committee on Banking Supervision, as these are very important for gauging the future role of sovereign ratings for foreign debt finance in developing countries. While the explanatory power of conventional rating determinants has declined since the Asian crisis, recent rating performance for Argentina and Turkey can still be qualified as lagging the markets, as variables of financial-sector strength and the endogenous effects of capital flows on macroeconomic variables seem to remain underemphasized in rating assessments. The market impact of sovereign ratings is predicted to decline as agencies have started to modify their country ceiling policy and as market participants try to exploit bond trading opportunities arising from the lagged nature of ratings. The paper presents theory and evidence to suggest that the Basel II Accord will destabilise private capital flows to the developing countries, if the current proposal to link regulatory bank capital to sovereign ratings is maintained: Assigning fixed minimum capital to bank assets whose risk weights are in turn determined by market-lagging cyclically determined ratings will reinforce the tendency of the capital ratio to work in a pro-cyclical way.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Turkey, Asia, and Argentina

249. Chile/Argentina — Economic Fallout

Publication Date:
12-2001
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the impact of Argentina's economic difficulties on Chilean firms. As well as its macroeconomic impact in Chile, reflected principally in currency volatility and a reduction of capital inflows, the Argentine crisis is affecting Chilean firms with investments in or exports to Argentina. It will also have an impact on Chile's tourist industry. Following the exit of many Chilean firms from Argentina over the last two years, those that remain are either in export sectors or have a long-term strategy under which they appear willing to ride out the present crisis. However, many will sustain short-term losses and some smaller investors, particularly in consumer sectors, may be forced out of the market.
Topic:
Economics, International Trade and Finance, and Politics
Political Geography:
Argentina, South America, and Chile

250. International — IMF Crisis Decisions

Publication Date:
11-2001
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The IMF's major shareholders have shown little willingness to provide new funds to Argentina. In deferring further assistance, the United States and other G7 shareholders have set limits on the international financial community's role in resolving a major emerging market financial crisis. The slowing global economy could provide an early test of these limits as it exposes weaknesses in other emerging markets — particularly those with larger geopolitical profiles than Argentina. Argentina's predicament highlights the Fund's paradox in wanting, on the one hand, to facilitate orderly resolution of crises (and prevent calamitous social impacts) and, on the other hand, to encourage markets to appropriately price risk by proving that non-optimal outcomes are possible. The risk of such outcomes is the basis upon which investors demand higher premiums from emerging market borrowers.
Topic:
International Organization, International Political Economy, and International Trade and Finance
Political Geography:
United States and Argentina