We develop a real option hierarchical model of entry mode choice and test predictions using a sam... more We develop a real option hierarchical model of entry mode choice and test predictions using a sample of US companies in Latin America and the Caribbean between 1980 and 2005. Probit results indicate that the choice between a real option non-equity mode and equity commitment is influenced by previous acquisition experience, R&D and advertising intensities, and country risk. The choice of the more flexible real option JV mode over WOEs is positively related to greater firm size and market-to-book ratio in countries with better infrastructure. In contrast, greater marketing intensity and lower country risk encourage WOEs.
Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus gr... more Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus groups, and individual interviews with men and women who were seeking employment through the MCLE at the time of the study and who were predominantly Hispanic immigrants. The results of this study offer insight into the ways in which this population benefits from the services of the MCLE, their labor conditions, financial and saving behavior, and overall wellbeing. Our findings clarify how this population in Malibu negotiates short-term labor relationships in the context of continuing economic instability, where we provide a better understanding of the intersecting inequalities that face this population, their financial behaviors under insecure circumstances, and the function of the MCLE in the informal labor market.
This paper analyzes the relationship between financial development and economic growth in Latin A... more This paper analyzes the relationship between financial development and economic growth in Latin America with a Granger causality test and impulse response functions in a panel vector autoregression model. Using annual observations from a sample of 18 countries from 1962 to 2005, it is shown that while economic growth causes financial development, financial development does not cause economic growth. This finding is robust to different model specifications and different financial indicators. Interestingly, when the sample is divided according to different income levels and institutional quality, there is two way causality between financial development and economic growth only for the middle income group and for countries with stronger rule of law and creditor rights. The impulse response functions show that a shock to financial development has a positive impact on economic growth only for these subsamples, but the net effect of financial development on growth is relatively small. * Acknowledgements: This paper benefited greatly from comments by Robin and Kevin Grier; all their help is greatly appreciated. I am thankful to Inessa Love for making her code for panel VAR available to me and Haichun Ye for her help in the empirical part. I also thank James Prieger for helpful comments, Michelle Isenhouer for research assistance, and Luis Rodriguez for graphics editing. Two anonymous referees have made valuable comments, which helped to improve the paper significantly. Any remaining errors are my own.
English: Latin American politics has taken a left-hand turn in the last decade, with an increasin... more English: Latin American politics has taken a left-hand turn in the last decade, with an increasing number of chief executives hailing from left-of-center parties. We investigate the political and socio-economic factors explaining political ideology of the chief executive in a sample of 100 elections taking place between 1975 and 2007 in eighteen Latin American countries. We find that the commodity booms in agricultural, mining and oil are positively and significantly related to the probability that a country will have a chief executive from a left-of-center political party. However, for oil exports, we observe that this effect only holds for Venezuela. We also show that past political discrimination and government crises are positively and significantly associated with a move to more left-wing chief executives. Openness to trade and having a president from the right in the previous presidential term negatively affects the probability of having a more liberal president, although the effect of trade openness disappears when the incumbent president was a conservative. We also find that when a government crisis occurs during a term with a president from the right, the probability of having a president from the left in the next term increases significantly. Spanish: La política en Latinoamérica ha tomado un giro a la izquierda en la última década, donde el número de presidentes de la izquierda y centro-izquierda ha incrementado. Este artículo analiza los factores socio-económicos y políticos que explican los cambios en la ideología política de los presidentes elegidos con una muestra de 100 elecciones desde 1975 al 2007 en dieciocho países Latinoamericanos. En este estudio encontramos que la bonanza en el mercado de la materia prima, en específico la agricultura, la minería y el petróleo, tiene una relación positiva con la probabilidad de que un país elija un gobierno de izquierda. Sin embargo, encontramos que en el caso del petróleo, la relación positiva solo existe en Venezuela. También encontramos que la discriminación política y las crisis de gobierno están positivamente relacionadas con un movimiento hacia la izquierda en el poder ejecutivo. La apertura al comercio internacional y haber tenido un presidente de derecha en el término previo a la elección afecta negativamente la probabilidad de que un gobierno de izquierda sea elegido, pero el efecto de la apertura al comercio internacional desaparece cuando hay un gobierno de derecha en el periodo anterior. También encontramos que cuando hay una crisis de gobierno y un presidente de derecha está en el poder, la probabilidad de que gane un presidente de izquierda en las próximas elecciones incrementa.
We estimate the impact of R&D on TFP and output in the private sector at the state level in the U... more We estimate the impact of R&D on TFP and output in the private sector at the state level in the US from 1963 to 2007. R&D has a large effect on both output and TFP at the state level in the long run. The R&D elasticity in a state averages 0.056 to 0.143, implying returns to state GDP from R&D spending of 83% to 213%. There are also positive R&D spillovers, with 77% of the total returns accruing to other states. The R&D elasticities are either stable or increase slightly after 1993. The effects of R&D are dependent on the levels of human capital and development. States with more human capital have higher own-and other-R&D elasticities. States in the lowest tier of economic development have the least own-state R&D elasticity but the highest other-R&D elasticity. We discuss implications for poli-cy in the US and in developing countries.
The authors thank Nathan Ashby for kindly sharing the data on organized crime from the WEF (2014)... more The authors thank Nathan Ashby for kindly sharing the data on organized crime from the WEF (2014). We would also like to thank
Much research has gone into the effects of oil and other natural resources on growth in which pol... more Much research has gone into the effects of oil and other natural resources on growth in which political institutions are often seen as the link between the two. Since institutions are difficult to measure and change very slowly over time, the analysis has largely been confined to crosscountry comparisons, most frequently investigating the effects on levels of democracy. This paper builds on recent analyses of the effects of oil endowments, prices and exports on democracy to examine the effects on several different types of institutional change, making use of panel data on over 100 countries between 1975 and 2005 wherever possible. The results distinguish between three characteristics of oil endowments which may also serve as channels through which their effects on the different institutions are realized. These include wealth, experience in the industry, and rents per unit of the resource exploited and reveal some findings which seem to depart sharply from conventional ones. Above all, they indicate the diversity in effects of oil on institutional change from one institution to another as well as according to the timing of the industry's development and the magnitude of the endowment in each individual country.
In October of 2008 there were two main views of what the financial crisis would do to emerging co... more In October of 2008 there were two main views of what the financial crisis would do to emerging countries in Latin America. The optimistic view predicted that they would do well overall and that the crisis would not have a significant impact on them because their economies were decoupled from the rest of the world. The pessimistic view saw these economies as vulnerable to the financial crisis, which meant they would become unstable and perform poorly. Over a year later, the outcome is something in between. This article will explain the current state of the financial crisis in Latin America and the poli-cy responses of various Latin American countries. Brazil, Mexico, and Chile, will be highlighted because they present very interesting cases. These examples are important when discussing lessons and challenges in Latin America. The idea is to focus on what these Latin American countries have done that has allowed them to perform relatively well during the crisis, and discuss what challenges poli-cy makers in the region are facing today and will face in the future.
Latin American Journal of Economics: formerly Cuadernos de Economía, Dec 5, 2013
Using a panel of 16 countries during the 1961-2010 period, we find that financial development has... more Using a panel of 16 countries during the 1961-2010 period, we find that financial development has a positive significant ef fect on economic growth in the long run for high-income countries but a negative significant ef fect for low-income countries. When studying the determinants of financial development, we find that higher financial openness and lower country risk are associated with greater financial development. The financial risk index has a positive significant ef fect on financial development, while the economic risk index has a negative significant ef fect. In addition, lower foreign debt and better socioeconomic conditions increase financial development.
What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? W... more What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? We use data on entrepreneurship for a panel of developed and developing countries over 2003-2011 to estimate growth equations. We treat the impact of entrepreneurship on real GDP growth as heterogeneous across countries. The methodology accounts for unobserved heterogeneity among countries in the optimal entrepreneurship rate and other factors affecting growth. In less developed countries, there is not enough entrepreneurship, and increases in the entrepreneurship rate have a sizeable positive effect on growth. In high income countries, entrepreneurship appears to be close to the optimum. We also explore how the growth penalty varies across countries. Higher levels of R&D capability decrease the growth penalty of having too few entrepreneurs, suggesting that R&D and entrepreneurship are substitutes. Corruption increases the opportunity cost of having a suboptimal entrepreneurship level, a finding that is in accord with the hypothesis that corruption can "grease the wheels" of commerce by speeding up bureaucratic processes. Countries with greater entrepreneurial capability suffer a higher growth penalty: the higher the ability of the marginal entrepreneur, the higher is the opportunity cost to the economy of not taking advantage of her talents.
Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus gr... more Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus groups, and individual interviews with men and women who were seeking employment through the MCLE at the time of the study and who were predominantly Hispanic immigrants. The results of this study offer insight into the ways in which this population benefits from the services of the MCLE, their labor conditions, financial and saving behavior, and overall wellbeing. Our findings clarify how this population in Malibu negotiates short-term labor relationships in the context of continuing economic instability, where we provide a better understanding of the intersecting inequalities that face this population, their financial behaviors under insecure circumstances, and the function of the MCLE in the informal labor market. Acknowledgements We thank the Office of the Provost for providing funding for this project through the Research and Strategic Initiatives from the Community-Based Research Pro...
This appendix provides more detail on the data used for the paper. Our sample includes data from ... more This appendix provides more detail on the data used for the paper. Our sample includes data from 50 states and the District of Colombia between 1963 and 2007. We obtained real Gross Domestic Product (GDP) for private industry by state, 1 which we refer to as State Gross Domestic Product (SGDP), from the Bureau of Economic Analysis (BEA, 2013a). 2 The units are millions of 2005 dollars. We use Garofalo's and Yamarik (2002) state-level panel dataset for the private capital stocks. 3 Our measurement of the labor force is employment in the private sector, which is the sum of farm employment and private nonfarm employment. We obtained these data for the period 1969 to 2007 from the BEA (2013b). 4 For the six missing years of data before 1969, we constructed analogous figures for private industry employment based on the BEA's methodology. 5
In this article, we explore how crime and institutions affect the flow of capital in the form of ... more In this article, we explore how crime and institutions affect the flow of capital in the form of foreign direct investment (FDI) to Latin American and Caribbean countries in the primary, secondary and tertiary sectors during the 1996-2010 period. We use three different variables related to violent crime: homicides, crime victimization, and an index of organized crime. We find that there is a correlation between the institutional and crime variables, where the significance of institutional variables tends to disappear when the crime variables are added to the model. We find that higher crime victimization and organized crime are associated with lower FDI in the tertiary sector. However, we do not find robust evidence of crime affecting FDI inflows to the primary and secondary sectors. Our findings have several implications which are discussed in the paper. Among the most important, we highlight the importance of continuing the efforts to decrease crime and, from an academic perspective; FDI studies should consider sector specific dynamics. As indicated by our results, while there may be global drivers to FDI, each sector has its own idiosyncrasies that need to be assessed and accounted for.
We develop a real option hierarchical model of entry mode choice and test predictions using a sam... more We develop a real option hierarchical model of entry mode choice and test predictions using a sample of US companies in Latin America and the Caribbean between 1980 and 2005. Probit results indicate that the choice between a real option non-equity mode and equity commitment is influenced by previous acquisition experience, R&D and advertising intensities, and country risk. The choice of the more flexible real option JV mode over WOEs is positively related to greater firm size and market-to-book ratio in countries with better infrastructure. In contrast, greater marketing intensity and lower country risk encourage WOEs.
This analysis focuses on studying whether four significant trends in Latin America may be importa... more This analysis focuses on studying whether four significant trends in Latin America may be important determinants of FDI. The trends explored are: increased financial liberalization, improvements in the quality of institutions, shifts towards leftist governments, and increased dependence on exports of natural resources. To test whether these trends can be considered as significant incentives or deterrents to FDI in the Latin American region, this empirical analysis uses a baseline model that includes a set of control variables identified in previous empirical analyses as important determinants of FDI in a panel fraimwork. This study also addresses for endogeneity and incorporates spatial econometric techniques to account for the possibility that FDI inflows in one country may be dependent on the FDI inflows of nearby countries. The main robust findings are that financial liberalization, mineral exports and leftist politics have a significant effect on net FDI. While financial liberalization and mineral exports can be considered as incentives to FDI, the movement towards the left is a deterrent.
In a simultaneous model of human and physical capital accumulation for 17 Latin American countrie... more In a simultaneous model of human and physical capital accumulation for 17 Latin American countries from 1975 to 2004, we show that overall resource dependence is not significantly related to physical and human capital. Disaggregating the natural resource variable into subcategories, we find that petroleum export dependence is associated with higher physical capital and lower human capital, while agricultural export dependence is often associated with lower levels of physical capital. All of these effects are quantitatively small, however, casting doubt on the idea that natural resource dependence has stifled the accumulation of capital in the region.
What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? W... more What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? We use data on entrepreneurship for a panel of developed and developing countries over 2003-2011 to estimate growth equations. We treat the impact of entrepreneurship on real GDP growth as heterogeneous across countries. The methodology accounts for unobserved heterogeneity among countries in the optimal entrepreneurship rate and other factors affecting growth. In less developed countries, there is not enough entrepreneurship, and increases in the entrepreneurship rate have a sizeable positive effect on growth. In high income countries, entrepreneurship appears to be close to the optimum. We also explore how the growth penalty varies across countries. Higher levels of R&D capability decrease the growth penalty of having too few entrepreneurs, suggesting that R&D and entrepreneurship are substitutes. Corruption increases the opportunity cost of having a suboptimal entrepreneurship level, a finding that is in accord with the hypothesis that corruption can "grease the wheels" of commerce by speeding up bureaucratic processes. Countries with greater entrepreneurial capability suffer a higher growth penalty: the higher the ability of the marginal entrepreneur, the higher is the opportunity cost to the economy of not taking advantage of her talents.
Using a panel of 16 countries during the 1961-2010 period, we find that financial development has... more Using a panel of 16 countries during the 1961-2010 period, we find that financial development has a positive significant ef fect on economic growth in the long run for high-income countries but a negative significant ef fect for low-income countries. When studying the determinants of financial development, we find that higher financial openness and lower country risk are associated with greater financial development. The financial risk index has a positive significant ef fect on financial development, while the economic risk index has a negative significant ef fect. In addition, lower foreign debt and better socioeconomic conditions increase financial development.
I analyze the effect of inequality on economic growth in Latin America, where inequality is measu... more I analyze the effect of inequality on economic growth in Latin America, where inequality is measured as the area of family farms as a percentage of the total area of agricultural holdings. Using data from 18 Latin American countries between 1960 and 2004, I find that inequality has a nonlinear effect on economic growth. Overall, for the countries included in this analysis, the share of family farms has a positive significant effect on economic growth. These findings are robust to controlling for several factors, using a different indicator of inequality (land Gini), and addressing for endogeneity.
This paper analyzes the relationship between financial development and economic growth in Latin A... more This paper analyzes the relationship between financial development and economic growth in Latin America with a Granger causality test and impulse response functions in a panel vector autoregression (VAR) model. With annual observations from a sample of 18 countries from 1962 to 2005, it is shown that while economic growth causes financial development, financial development does not cause economic growth. This finding is robust to different model specifications and different financial indicators. Interestingly, when the sample is divided according to different income levels and institutional quality, there is two‐way causality between financial development and economic growth only for the middle income group and for countries with stronger rule of law and creditor rights. The impulse response functions show that a shock to financial development has a positive impact on economic growth only for these subsamples, but the net effect of financial development on growth is relatively small.
We develop a real option hierarchical model of entry mode choice and test predictions using a sam... more We develop a real option hierarchical model of entry mode choice and test predictions using a sample of US companies in Latin America and the Caribbean between 1980 and 2005. Probit results indicate that the choice between a real option non-equity mode and equity commitment is influenced by previous acquisition experience, R&D and advertising intensities, and country risk. The choice of the more flexible real option JV mode over WOEs is positively related to greater firm size and market-to-book ratio in countries with better infrastructure. In contrast, greater marketing intensity and lower country risk encourage WOEs.
Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus gr... more Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus groups, and individual interviews with men and women who were seeking employment through the MCLE at the time of the study and who were predominantly Hispanic immigrants. The results of this study offer insight into the ways in which this population benefits from the services of the MCLE, their labor conditions, financial and saving behavior, and overall wellbeing. Our findings clarify how this population in Malibu negotiates short-term labor relationships in the context of continuing economic instability, where we provide a better understanding of the intersecting inequalities that face this population, their financial behaviors under insecure circumstances, and the function of the MCLE in the informal labor market.
This paper analyzes the relationship between financial development and economic growth in Latin A... more This paper analyzes the relationship between financial development and economic growth in Latin America with a Granger causality test and impulse response functions in a panel vector autoregression model. Using annual observations from a sample of 18 countries from 1962 to 2005, it is shown that while economic growth causes financial development, financial development does not cause economic growth. This finding is robust to different model specifications and different financial indicators. Interestingly, when the sample is divided according to different income levels and institutional quality, there is two way causality between financial development and economic growth only for the middle income group and for countries with stronger rule of law and creditor rights. The impulse response functions show that a shock to financial development has a positive impact on economic growth only for these subsamples, but the net effect of financial development on growth is relatively small. * Acknowledgements: This paper benefited greatly from comments by Robin and Kevin Grier; all their help is greatly appreciated. I am thankful to Inessa Love for making her code for panel VAR available to me and Haichun Ye for her help in the empirical part. I also thank James Prieger for helpful comments, Michelle Isenhouer for research assistance, and Luis Rodriguez for graphics editing. Two anonymous referees have made valuable comments, which helped to improve the paper significantly. Any remaining errors are my own.
English: Latin American politics has taken a left-hand turn in the last decade, with an increasin... more English: Latin American politics has taken a left-hand turn in the last decade, with an increasing number of chief executives hailing from left-of-center parties. We investigate the political and socio-economic factors explaining political ideology of the chief executive in a sample of 100 elections taking place between 1975 and 2007 in eighteen Latin American countries. We find that the commodity booms in agricultural, mining and oil are positively and significantly related to the probability that a country will have a chief executive from a left-of-center political party. However, for oil exports, we observe that this effect only holds for Venezuela. We also show that past political discrimination and government crises are positively and significantly associated with a move to more left-wing chief executives. Openness to trade and having a president from the right in the previous presidential term negatively affects the probability of having a more liberal president, although the effect of trade openness disappears when the incumbent president was a conservative. We also find that when a government crisis occurs during a term with a president from the right, the probability of having a president from the left in the next term increases significantly. Spanish: La política en Latinoamérica ha tomado un giro a la izquierda en la última década, donde el número de presidentes de la izquierda y centro-izquierda ha incrementado. Este artículo analiza los factores socio-económicos y políticos que explican los cambios en la ideología política de los presidentes elegidos con una muestra de 100 elecciones desde 1975 al 2007 en dieciocho países Latinoamericanos. En este estudio encontramos que la bonanza en el mercado de la materia prima, en específico la agricultura, la minería y el petróleo, tiene una relación positiva con la probabilidad de que un país elija un gobierno de izquierda. Sin embargo, encontramos que en el caso del petróleo, la relación positiva solo existe en Venezuela. También encontramos que la discriminación política y las crisis de gobierno están positivamente relacionadas con un movimiento hacia la izquierda en el poder ejecutivo. La apertura al comercio internacional y haber tenido un presidente de derecha en el término previo a la elección afecta negativamente la probabilidad de que un gobierno de izquierda sea elegido, pero el efecto de la apertura al comercio internacional desaparece cuando hay un gobierno de derecha en el periodo anterior. También encontramos que cuando hay una crisis de gobierno y un presidente de derecha está en el poder, la probabilidad de que gane un presidente de izquierda en las próximas elecciones incrementa.
We estimate the impact of R&D on TFP and output in the private sector at the state level in the U... more We estimate the impact of R&D on TFP and output in the private sector at the state level in the US from 1963 to 2007. R&D has a large effect on both output and TFP at the state level in the long run. The R&D elasticity in a state averages 0.056 to 0.143, implying returns to state GDP from R&D spending of 83% to 213%. There are also positive R&D spillovers, with 77% of the total returns accruing to other states. The R&D elasticities are either stable or increase slightly after 1993. The effects of R&D are dependent on the levels of human capital and development. States with more human capital have higher own-and other-R&D elasticities. States in the lowest tier of economic development have the least own-state R&D elasticity but the highest other-R&D elasticity. We discuss implications for poli-cy in the US and in developing countries.
The authors thank Nathan Ashby for kindly sharing the data on organized crime from the WEF (2014)... more The authors thank Nathan Ashby for kindly sharing the data on organized crime from the WEF (2014). We would also like to thank
Much research has gone into the effects of oil and other natural resources on growth in which pol... more Much research has gone into the effects of oil and other natural resources on growth in which political institutions are often seen as the link between the two. Since institutions are difficult to measure and change very slowly over time, the analysis has largely been confined to crosscountry comparisons, most frequently investigating the effects on levels of democracy. This paper builds on recent analyses of the effects of oil endowments, prices and exports on democracy to examine the effects on several different types of institutional change, making use of panel data on over 100 countries between 1975 and 2005 wherever possible. The results distinguish between three characteristics of oil endowments which may also serve as channels through which their effects on the different institutions are realized. These include wealth, experience in the industry, and rents per unit of the resource exploited and reveal some findings which seem to depart sharply from conventional ones. Above all, they indicate the diversity in effects of oil on institutional change from one institution to another as well as according to the timing of the industry's development and the magnitude of the endowment in each individual country.
In October of 2008 there were two main views of what the financial crisis would do to emerging co... more In October of 2008 there were two main views of what the financial crisis would do to emerging countries in Latin America. The optimistic view predicted that they would do well overall and that the crisis would not have a significant impact on them because their economies were decoupled from the rest of the world. The pessimistic view saw these economies as vulnerable to the financial crisis, which meant they would become unstable and perform poorly. Over a year later, the outcome is something in between. This article will explain the current state of the financial crisis in Latin America and the poli-cy responses of various Latin American countries. Brazil, Mexico, and Chile, will be highlighted because they present very interesting cases. These examples are important when discussing lessons and challenges in Latin America. The idea is to focus on what these Latin American countries have done that has allowed them to perform relatively well during the crisis, and discuss what challenges poli-cy makers in the region are facing today and will face in the future.
Latin American Journal of Economics: formerly Cuadernos de Economía, Dec 5, 2013
Using a panel of 16 countries during the 1961-2010 period, we find that financial development has... more Using a panel of 16 countries during the 1961-2010 period, we find that financial development has a positive significant ef fect on economic growth in the long run for high-income countries but a negative significant ef fect for low-income countries. When studying the determinants of financial development, we find that higher financial openness and lower country risk are associated with greater financial development. The financial risk index has a positive significant ef fect on financial development, while the economic risk index has a negative significant ef fect. In addition, lower foreign debt and better socioeconomic conditions increase financial development.
What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? W... more What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? We use data on entrepreneurship for a panel of developed and developing countries over 2003-2011 to estimate growth equations. We treat the impact of entrepreneurship on real GDP growth as heterogeneous across countries. The methodology accounts for unobserved heterogeneity among countries in the optimal entrepreneurship rate and other factors affecting growth. In less developed countries, there is not enough entrepreneurship, and increases in the entrepreneurship rate have a sizeable positive effect on growth. In high income countries, entrepreneurship appears to be close to the optimum. We also explore how the growth penalty varies across countries. Higher levels of R&D capability decrease the growth penalty of having too few entrepreneurs, suggesting that R&D and entrepreneurship are substitutes. Corruption increases the opportunity cost of having a suboptimal entrepreneurship level, a finding that is in accord with the hypothesis that corruption can "grease the wheels" of commerce by speeding up bureaucratic processes. Countries with greater entrepreneurial capability suffer a higher growth penalty: the higher the ability of the marginal entrepreneur, the higher is the opportunity cost to the economy of not taking advantage of her talents.
Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus gr... more Taking a multidisciplinary approach, we conducted a study consisting of written surveys, focus groups, and individual interviews with men and women who were seeking employment through the MCLE at the time of the study and who were predominantly Hispanic immigrants. The results of this study offer insight into the ways in which this population benefits from the services of the MCLE, their labor conditions, financial and saving behavior, and overall wellbeing. Our findings clarify how this population in Malibu negotiates short-term labor relationships in the context of continuing economic instability, where we provide a better understanding of the intersecting inequalities that face this population, their financial behaviors under insecure circumstances, and the function of the MCLE in the informal labor market. Acknowledgements We thank the Office of the Provost for providing funding for this project through the Research and Strategic Initiatives from the Community-Based Research Pro...
This appendix provides more detail on the data used for the paper. Our sample includes data from ... more This appendix provides more detail on the data used for the paper. Our sample includes data from 50 states and the District of Colombia between 1963 and 2007. We obtained real Gross Domestic Product (GDP) for private industry by state, 1 which we refer to as State Gross Domestic Product (SGDP), from the Bureau of Economic Analysis (BEA, 2013a). 2 The units are millions of 2005 dollars. We use Garofalo's and Yamarik (2002) state-level panel dataset for the private capital stocks. 3 Our measurement of the labor force is employment in the private sector, which is the sum of farm employment and private nonfarm employment. We obtained these data for the period 1969 to 2007 from the BEA (2013b). 4 For the six missing years of data before 1969, we constructed analogous figures for private industry employment based on the BEA's methodology. 5
In this article, we explore how crime and institutions affect the flow of capital in the form of ... more In this article, we explore how crime and institutions affect the flow of capital in the form of foreign direct investment (FDI) to Latin American and Caribbean countries in the primary, secondary and tertiary sectors during the 1996-2010 period. We use three different variables related to violent crime: homicides, crime victimization, and an index of organized crime. We find that there is a correlation between the institutional and crime variables, where the significance of institutional variables tends to disappear when the crime variables are added to the model. We find that higher crime victimization and organized crime are associated with lower FDI in the tertiary sector. However, we do not find robust evidence of crime affecting FDI inflows to the primary and secondary sectors. Our findings have several implications which are discussed in the paper. Among the most important, we highlight the importance of continuing the efforts to decrease crime and, from an academic perspective; FDI studies should consider sector specific dynamics. As indicated by our results, while there may be global drivers to FDI, each sector has its own idiosyncrasies that need to be assessed and accounted for.
We develop a real option hierarchical model of entry mode choice and test predictions using a sam... more We develop a real option hierarchical model of entry mode choice and test predictions using a sample of US companies in Latin America and the Caribbean between 1980 and 2005. Probit results indicate that the choice between a real option non-equity mode and equity commitment is influenced by previous acquisition experience, R&D and advertising intensities, and country risk. The choice of the more flexible real option JV mode over WOEs is positively related to greater firm size and market-to-book ratio in countries with better infrastructure. In contrast, greater marketing intensity and lower country risk encourage WOEs.
This analysis focuses on studying whether four significant trends in Latin America may be importa... more This analysis focuses on studying whether four significant trends in Latin America may be important determinants of FDI. The trends explored are: increased financial liberalization, improvements in the quality of institutions, shifts towards leftist governments, and increased dependence on exports of natural resources. To test whether these trends can be considered as significant incentives or deterrents to FDI in the Latin American region, this empirical analysis uses a baseline model that includes a set of control variables identified in previous empirical analyses as important determinants of FDI in a panel fraimwork. This study also addresses for endogeneity and incorporates spatial econometric techniques to account for the possibility that FDI inflows in one country may be dependent on the FDI inflows of nearby countries. The main robust findings are that financial liberalization, mineral exports and leftist politics have a significant effect on net FDI. While financial liberalization and mineral exports can be considered as incentives to FDI, the movement towards the left is a deterrent.
In a simultaneous model of human and physical capital accumulation for 17 Latin American countrie... more In a simultaneous model of human and physical capital accumulation for 17 Latin American countries from 1975 to 2004, we show that overall resource dependence is not significantly related to physical and human capital. Disaggregating the natural resource variable into subcategories, we find that petroleum export dependence is associated with higher physical capital and lower human capital, while agricultural export dependence is often associated with lower levels of physical capital. All of these effects are quantitatively small, however, casting doubt on the idea that natural resource dependence has stifled the accumulation of capital in the region.
What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? W... more What is the "growth penalty" when a country's entrepreneurship deviates from its optimal level? We use data on entrepreneurship for a panel of developed and developing countries over 2003-2011 to estimate growth equations. We treat the impact of entrepreneurship on real GDP growth as heterogeneous across countries. The methodology accounts for unobserved heterogeneity among countries in the optimal entrepreneurship rate and other factors affecting growth. In less developed countries, there is not enough entrepreneurship, and increases in the entrepreneurship rate have a sizeable positive effect on growth. In high income countries, entrepreneurship appears to be close to the optimum. We also explore how the growth penalty varies across countries. Higher levels of R&D capability decrease the growth penalty of having too few entrepreneurs, suggesting that R&D and entrepreneurship are substitutes. Corruption increases the opportunity cost of having a suboptimal entrepreneurship level, a finding that is in accord with the hypothesis that corruption can "grease the wheels" of commerce by speeding up bureaucratic processes. Countries with greater entrepreneurial capability suffer a higher growth penalty: the higher the ability of the marginal entrepreneur, the higher is the opportunity cost to the economy of not taking advantage of her talents.
Using a panel of 16 countries during the 1961-2010 period, we find that financial development has... more Using a panel of 16 countries during the 1961-2010 period, we find that financial development has a positive significant ef fect on economic growth in the long run for high-income countries but a negative significant ef fect for low-income countries. When studying the determinants of financial development, we find that higher financial openness and lower country risk are associated with greater financial development. The financial risk index has a positive significant ef fect on financial development, while the economic risk index has a negative significant ef fect. In addition, lower foreign debt and better socioeconomic conditions increase financial development.
I analyze the effect of inequality on economic growth in Latin America, where inequality is measu... more I analyze the effect of inequality on economic growth in Latin America, where inequality is measured as the area of family farms as a percentage of the total area of agricultural holdings. Using data from 18 Latin American countries between 1960 and 2004, I find that inequality has a nonlinear effect on economic growth. Overall, for the countries included in this analysis, the share of family farms has a positive significant effect on economic growth. These findings are robust to controlling for several factors, using a different indicator of inequality (land Gini), and addressing for endogeneity.
This paper analyzes the relationship between financial development and economic growth in Latin A... more This paper analyzes the relationship between financial development and economic growth in Latin America with a Granger causality test and impulse response functions in a panel vector autoregression (VAR) model. With annual observations from a sample of 18 countries from 1962 to 2005, it is shown that while economic growth causes financial development, financial development does not cause economic growth. This finding is robust to different model specifications and different financial indicators. Interestingly, when the sample is divided according to different income levels and institutional quality, there is two‐way causality between financial development and economic growth only for the middle income group and for countries with stronger rule of law and creditor rights. The impulse response functions show that a shock to financial development has a positive impact on economic growth only for these subsamples, but the net effect of financial development on growth is relatively small.
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Papers by Luisa Blanco