RESEARCH DEPARTMENT
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The IDB has researchers in many departments producing working papers on economic and social topics. Many of these documents constitute background research for the IDB’s flagship publication "Development in the Americas" prepared by the Research Department. In addition, the IDB finances and mentors studies conducted by other institutions in order to build knowledge and research capacity. All IDB working papers are peer reviewed and meet high editorial standards.

 

2022 LATIN AMERICAN AND CARIBBEAN MACROECONOMIC REPORT: From Recovery to Renaissance - Turning Crisis into Opportunity

2022 Macro Report

Coordinated by Eduardo Cavallo, Arturo Galindo, Victoria Nuguer and Andrew Powell

  • Economic growth in Latin America and the Caribbean was stronger than expected in 2021 but waned at the start of 2022. The surge in commodity prices due to the war between Russia and Ukraine will provide a boost to exporters, while imposing significant costs on commodity importers and pushing up inflation across countries.

  • The ongoing conflict, together with policy normalization in advanced economies, carries significant risks for the region. Volatility in financial markets could depress investment and bring down growth further. Policymakers need to take urgent measures to mitigate risk and boost inclusive growth. As minor fixes are unlikely to result in notable benefits, governments should consider more ambitious resets of policy frameworks.

  • This report analyzes growth prospects, fiscal and monetary policy, and the outlook for the external sector. The recommendations stress the need for a new fiscal and labor market architecture. Policymakers should seize the window of opportunity provided by the crisis to improve the outlook for the region.

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DIA 2021: TRUST - The Key to Social Cohesion and Growth in Latin America and the Caribbean

TRUST The Key to Social Cohesion and Growth in Latin America and the Caribbean

Edited by Philip Keefer and Carlos Scartascini

  • Trust is a tremendous opportunity for countries in Latin America and the Caribbean. By making trust a goal of public policy, and not simply its byproduct, countries can accelerate growth and employment. Decisions to invest, employ, produce, buy, or sell all depend on trust. The most productive, skilled, and innovative individuals have greater economic opportunities in high-trust societies. Greater trust will unleash growth.
  • Mistrust in the private sector is an obstacle to inclusive growth. It is well known that the business sector tends to distrust governments, and this hurts investment and productivity. A survey of thousands of export-oriented firms in the region reveals that distrust within firms is also an obstacle to investment and innovation.
  • Mistrust in the public sector is an obstacle to inclusive growth. Trust in governments is low in the region. Our study finds that the lack of trust makes it difficult for citizens to demand better public policies and services. A survey of thousands of public officials revealed that mistrust within public agencies, and their mistrust of citizens, reduces public sector capacity to serve citizen needs.
  • Restoring trust depends on information and empowerment. Citizens do not trust government when they are uninformed about what government is doing for them, and when they have little capacity to act together to hold government accountable. Firms do not trust each other when they can do little about opportunistic behavior. Governments should inform and empower to restore trust.

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LATEST BLOG POSTS

When Insurance for Small Businesses Provides Broad Social Gains
When Insurance for Small Businesses Provides Broad Social Gains

Since the outbreak of the COVID-19 pandemic, various studies have examined how large domestic and multinational firms respond to economic shocks, including health-related ones. But there has been less focus on how family-operated micro, small, and medium-sized enterprises (MSMEs) modify their business decisions when faced with such disruptions. Similarly, relatively little attention has been directed […]

The post When Insurance for Small Businesses Provides Broad Social Gains appeared first on Ideas Matter.

Trust: An Obstacle and an Opportunity for Digital Transformation
Trust: An Obstacle and an Opportunity for Digital Transformation

It is well understood that digital transformation can build trust between citizens and the state. It improves service delivery, transparency, and the efficiency of public expenditure—all of which contributes to greater citizen trust in government. But trust is also critical to allowing the process of digital transformation to occur in the first place, and Latin […]

The post Trust: An Obstacle and an Opportunity for Digital Transformation appeared first on Ideas Matter.

Avoiding Economic Long-COVID: Policies to Support Firms and Workers in Latin America and the Caribbean
Avoiding Economic Long-COVID: Policies to Support Firms and Workers in Latin America and the Caribbean

During the peak of the COVID-19 crisis, governments in Latin America and the Caribbean aided firms and households with support packages coordinated with central bank monetary policy. For many, liquidity injections and flexible financial sector supervision helped ease the pain.    While many small firms closed their doors during the crisis, surprisingly few larger firms […]

The post Avoiding Economic Long-COVID: Policies to Support Firms and Workers in Latin America and the Caribbean appeared first on Ideas Matter.

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