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From Commodity Booms to the Knowledge Economy

From Commodity Booms to the Knowledge Economy. Center for Hemispheric Policy, May 2008 W. F. Maloney Office of the LAC Chief Economist Latin America and the Caribbean Region The World Bank . The commodity boom has been kind to Latin America.

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From Commodity Booms to the Knowledge Economy

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  1. From Commodity Booms to the Knowledge Economy Center for Hemispheric Policy, May 2008 W. F. Maloney Office of the LAC Chief Economist Latin America and the Caribbean Region The World Bank

  2. The commodity boom has been kind to Latin America

  3. And a large share of the recent high growth rates are due to this “good luck”

  4. The question: Can Latin America turn this luck into sustained growth? Source: Calderon, Fajnzylber y Loayza (2002)

  5. ..And are we back to Prebisch’s concerns with our economic structure? • The “resource curse” is probably a myth…but LA underperforms in all sectors • Forestry: • remains a dynamic sector in Sweden, and Finland. ..but Brazil or Chile? • 1944 Haig report “Chile tremendous forestry potential” didn’t appear

  6. LA under-performs • Minerals: can lead to dynamic industries • Norway shows US petroleum based success replicable… • Discovers petroleum in 1969, now exports platforms; “Norwegian school of thought” in oil exploration. • Australia-exports more mining expertise than wine • But LA stagnated • Brazil, Peru “mining underperformers” Wright (2001). • Chile: Australia’s BHP discovered “la Escondida” • Agriculture: TFP growth faster in agriculture than manufacturing.. But LA underperforms in both…

  7. …including “high tech” goods Comparative Advantage in Innovation Brazil: Airplanes 3.5!!! Taiwan: Computers Mexico: Computers

  8. Innovation is Central: Forestry remains a dynamic sector in Sweden, Finland Nokia: Site of an early pulp mill in Finland Learn how to learn

  9. It’s not so much what we produce, but that we’re not producing at world class levels.. Why?

  10. Deep historical roots: We started behind in literacy… Sources : Mariscal and Sokoloff 2000, and Meredith 1995, Maloney 2007

  11. … and valued poetry over engineering Sources : Maloney 2007

  12. We continue to under perform in education quality

  13. LAC “underperforms in R&D Source: Lederman and Maloney 2002 “ R&D and Development”

  14. And what we invest generates little knowledge or growth Patents = B1R&D + Bp Country*R&D Bosch, Lederman and Maloney (2007)

  15. Partly because of low academic quality and weak collaboration between university and firm(interviews with entrepreneurs: scale 1-7) Source: World Economic Forum

  16. Latin Students Abroad: Still Condemned to Solitude?

  17. Challenges to Reform • Lack of consensus on importance • Chile, yes • Mex, Col, Br- noise but not yet coherent • Consensus, but difficult political economy • Chile- all agreed on macro, but micro haunted by the ghosts of ‘73 • Mex-balkanized policy making • US-LA post 08: An Alliance for Productivity?

  18. End

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