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11. Exploring the Uncharted Export: An Analysis of Tourism-Related Foreign Expenditure with International Spend Data

Author:
Michele Coscia, Ricardo Hausmann, and Frank Neffke
Publication Date:
11-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Tourism is one of the most important economic activities in the world: for many countries it represents the single largest product in their export basket. However, it is a product difficult to chart: "exporters" of tourism do not ship it abroad, but they welcome importers inside the country. Current research uses social accounting matrices and general equilibrium models, but the standard industry classifications they use make it hard to identify which domestic industries cater to foreign visitors. In this paper, we make use of open source data and of anonymized and aggregated transaction data giving us insights about the spend behavior of foreigners inside two countries, Colombia and the Netherlands, to inform our research. With this data, we are able to describe what constitutes the tourism sector, and to map the most attractive destinations for visitors. In particular, we find that countries might observe different geographical tourists' patterns - concentration versus decentralization -; we show the importance of distance, a country's reported wealth and cultural affinity in informing tourism; and we show the potential of combining open source data and anonymized and aggregated transaction data on foreign spend patterns in gaining insight as to the evolution of tourism from one year to another.
Topic:
Economics, Political Economy, and Tourism
Political Geography:
Europe, Colombia, South America, and Netherlands

12. Weathering Collapse: An Assessment of the Financial and Operational Situation of the Venezuelan Oil Industry

Author:
Roberto Hernández Hernández and Francisco J. Monaldi
Publication Date:
11-2016
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Venezuela has one of the most abundant geological endowments in the world. Oil proven reserves are among the largest globally, even if a more conservative criterion than the one used by the current government is applied. However, these resources are qualitatively different than those of other abundant regions such as the Middle East. The large majority constitutes extra-heavy oil, which generally requires higher oil prices to be extracted profitably. During the last decade, the Venezuelan oil industry wasted a unique opportunity to increase investment and production. At the high oil prices that prevailed, the massive oil reserves could have been monetized by rapidly increasing production with a large margin of profitability. Quite to the contrary, production steadily dropped due either to lack of investment in the new unconventional oil projects or for failing to compensate the decline of the older conventional fields. It is a tragic story of great potential with dismal performance. A series of trends were negatively impacting the Venezuelan oil industry even before the oil price collapse in 2014. From the revenue side, although oil prices showed an increase in real terms of 120% between 2000 and 2014, the barrels that effectively generate cash for Venezuela have shown a continuous decline. This is not just because production has been declining for the most part during the last eighteen years (a trend that has gotten significantly worse during the last year), but also because of a number of developments. First, during that period, total exports have declined more rapidly than production, and recently, net exports have declined more than total exports. Consumption in the massively subsidized domestic market increased until 2013 (when it started to decline likely because of the recession in the local economy), while imports of oil products for the domestic market have increased since 2012. The domestic market not only generates negative cash-flow for the national oil company (NOC), PDVSA, but also its expansion reduced the barrels available to export. More recently, there has also been an increase in imports of light oil and naphtha as diluents for the extra-heavy oil. Second, the Venezuelan production basket has become heavier and the share of unconventional production, generally less profitable, has increased. Third, the production wholly operated by PDVSA has been falling much more rapidly, while the production share of joint-ventures increased. Fourth, a significant share of the exports to Latin America and the Caribbean is subsidized (although these exports have declined recently). Fifth, some oil exports are committed to repay debts of PDVSA and specially the Venezuelan government, limiting the actual cash flow received by the company. In particular, the government’s debt agreements with China involve a significant and increasing amount of production, although recently those agreements were restructured, allowing for a grace period with no capital amortization. From the expenditure side, PDVSA was increasingly responsible of carrying social expenditures and activities not related to the oil industry, which limited the resources for highly profitable investments. That is in addition to the increased fiscal take due to changes in the tax legislation. Also, higher investment requirements due to an increase in the equity share of PDVSA in joint venture projects, has had an impact on its cash flow. The explanations for the underperformance of the Venezuelan oil industry basically fall into two connected categories: the multiple problems facing PDVSA; and the increase in above-ground risks for foreign investors operating in the country. The deterioration of the institutional framework, led to radical fiscal and regulatory changes, and to the nationalization of the majority of the industry. In addition, the substantial over-extraction of resources from the NOC, the significant macroeconomic distortions affecting the cost structure of oil companies, and the constraints imposed by the energy infrastructure and human capital availability; have combined to produce dismal results. The massive firing of the majority of the management and technical experts from PDVSA in 2003 following the political conflict that led to a strike, has left the company with limited capabilities to operate effectively. The recent decline in oil prices, and the changes in the international market structure, have exposed more dramatically the difficulties facing the Venezuelan oil sector, and call into question its ability to prevent a continuation of the declining trend in oil extraction. This situation becomes particularly severe if we take into account the cash flow constraints facing PDVSA, as well as its multiple operational problems, power cuts, and conflicts with oilfield services providers. These challenges are proportional to the enormous investments required to finance the projects in the Orinoco Oil Belt, where most of the reserves in Venezuela are located, and where the quality of the crude and the lack of development of the region, are just two of the many issues that need to be addressed. Since this paper is part of a wider project to understand the macroeconomic challenges facing the country in 2016-17, it focuses narrowly on the financial problems of the oil industry in the short-term and the operational challenges that could impede its recovery in the next couple of years. Within this context, it largely analyzes the upstream operations, i.e. oil extraction, rather than the downstream, given that in the former is where the oil rents are generated and constitutes the main source of foreign exchange and fiscal revenues of Venezuela. Other areas for further research are mentioned at the end of the document.2 Official figures are used to the extent that they are publicly available. An important aspect that prevents an exhaustive evaluation of the oil sector in Venezuela is the lack of available information regarding key performance indicators affecting the cost structure of oil projects, the cash flow of PDVSA, and the fiscal contributions of the oil sector to the government, among other important variables. Thus, on occasion, estimations for variables of interest and explanations for their divergence from official figures are provided. The paper has two main sections. The first one analyzes the issues affecting the cash flow of PDVSA, the effects of macroeconomic and fiscal variables on both revenues and costs, as well as other financial issues affecting the performance of the company. The second section discusses some of the operational challenges facing the industry and mentions areas for further research. 2 For a more general overview of the recent developments of the oil sector in Venezuela see Monaldi (2015)
Topic:
Economics, International Trade and Finance, Oil, and Natural Resources
Political Geography:
South America and Venezuela

13. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa

Author:
Nora Lustig
Publication Date:
08-2015
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. While fiscal policy always reduces inequality, this is not the case with poverty.
Topic:
Economics, Poverty, and Social Stratification
Political Geography:
Africa, South America, and Latin America

14. L’insécurité énergétique en Amérique du Sud : développement des réseaux et intégration sectorielle entre le Pérou et le Chili (Energy Insecurity in South America : Network Development and Sectoral Integration in Chile and Peru)

Author:
Alvaro Artigas
Publication Date:
10-2015
Content Type:
Special Report
Institution:
Centre d'Etudes et de Recherches Internationales
Abstract:
The South American continent has experienced a robust economic growth presently overshadowed by an uneven energy integration that fails to meet both an ever-growing industrial and metropolitan demand. Several integration mechanisms co-exist, but a poor integration layout threatens the energy security of the region and individual countries. Several factors contribute to this. Firstly, the very template of regional integration has failed to deliver a valid set of supranational coordination mechanisms aimed at coordinating and sorting out disputes among individual countries. Secondly, national States tie security to self-sufficiency in the face of mutual distrust, thus rendering potential advantages of market and networks integration a less desirable choice. The example of Chile and Peru integration drive reveals many of these dynamics while showing at the same time the windfalls of a transversal sectoral coordination over diplomatic exchange by individual states. What is the potential for an alternative template where the State will play a less intrusive role while consigning territorial disagreements backstage?
Topic:
Economics, International Trade and Finance, Political Economy, Natural Resources, and Regional Integration
Political Geography:
South America, Latin America, Chile, and Peru

15. Peace and Stability in the Post-Conflict Era

Author:
Douglas Farah, Robert D. Lamb, and Carl Meacham
Publication Date:
03-2014
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
The project that culminated in this report was conceived just over a year ago as an initiative to assess the major accomplishments in strengthening the Colombian government's efforts to bring peace and stability to its countryside.
Topic:
Development, Economics, Terrorism, International Security, and Governance
Political Geography:
South America

16. Smallholders at Risk: Monoculture expansion, land, food and livelihoods in Latin America

Publication Date:
04-2014
Content Type:
Policy Brief
Institution:
Oxfam Publishing
Abstract:
Greater investment in agriculture is needed to reduce rural poverty and improve food security. This means not simply increasing supply but ensuring that adequate, nutritious food is accessible to every person at all times. How investment is made, its context and conditions, is at least as important as how much is invested.
Topic:
Agriculture, Economics, Markets, and Food
Political Geography:
South America and Latin America

17. Amazonian policy and politics, 2003-13: deforestation, hydropower and biofuels

Author:
Eduardo Viola and Larissa Basso
Publication Date:
04-2014
Content Type:
Working Paper
Institution:
Norwegian Centre for Conflict Resolution
Abstract:
In the period 2003-13 Brazil experienced important economic and political developments: it became a much more relevant international player; its economy entered the world's top ten; and society became more politically active and expressed its complaints more aggressively. Amazonian policy and the politics of the period developed in this context, and three issues played a central role. Firstly, a cutback in deforestation led to a decrease in Brazil's carbon emissions by around one-third, which is a unique situation in the world. Secondly, despite the region's hydropower potential, projects developed slowly due to new environmental requirements and societal opposition. Thirdly, the production of biofuels was greatly encouraged by the introduction of flexible-fuel vehicles technology, but lost momentum after the discovery of offshore oil reserves; and there was a heated debate about the relationship between the expansion of sugar-cane plantations and deforestation after the decline in deforestation demonstrated that such plantations were not its main cause. Analysis indicates that there were three trends in Amazonian environmental policy and politics during the decade: continuity of former policies (2003-05), an upward trend towards sustainability (2005-10) and a downward trend (2010-13). The results of the 2014 elections are key to predicting future developments.
Topic:
Economics, Environment, Human Rights, Politics, and Governance
Political Geography:
Brazil and South America

18. Governance Transfer by the Organization of American States (OAS)

Author:
Mathis Lohaus
Publication Date:
03-2014
Content Type:
Working Paper
Institution:
Collaborative Research Center (SFB) 700
Abstract:
This case study examines to which extent the Organization of American States (OAS) engages in governance transfer to its member states. Both the standards and policies prescribed in regional documents as well as their application are analyzed. Historically, the organization has emphasized two areas. Human rights are protected through multiple treaties and a strong regional legal regime. Democracy is protected by strong incentives to avoid coups and supported via different types of assistance, including a long-standing system of election observation. The OAS addresses good governance since the 1990s, particularly with regard to combating corruption and modernizing public management. Provisions concerning the rule of law are addressed in connection with the other standards. After analyzing the framework and measures of governance transfer, this report explores how the observed patterns can be explained and briefly discusses the future prospects for the OAS.
Topic:
Economics, Human Rights, International Cooperation, and Governance
Political Geography:
America, South America, and North America

19. Will Brazil Get What It Expects from the World Cup?

Author:
Ricardo Sennes
Publication Date:
06-2014
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Like any other international mega-event, hosting the FIFA World Cup brings the promise of a positive long-term legacy for Brazil. It is a unique opportunity for visibility among more than 3 billion people worldwide who will either attend or watch the games on television. The exposure from the games has the potential to draw national and international investments before, during, and after the thirty-two teams compete for the Cup.
Topic:
Civil Society and Economics
Political Geography:
Brazil and South America

20. Uncertain Energy: The Caribbean's Gamble with Venezuela

Author:
David L. Goldwyn and Cory R Gill
Publication Date:
07-2014
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
It has been nearly ten years since the launch of Petrocaribe, a program designed to win the political loyalty of the Caribbean states through generous credit subsidies to help import Venezuelan crude oil and products. Recipient states have grown dependent on high-cost, high-carbon fuels for power generation and Venezuelan credit to balance their budgets.
Topic:
Economics, Energy Policy, International Trade and Finance, and Oil
Political Geography:
South America, Latin America, Caribbean, and Venezuela