Luis Serven

William F. Maloney

Daniel Lederman

William Francis Maloney

Analyzing the experience of Mexico under the North American Free Trade Agreement (NAFTA), the authors draw lessons for other countries considering free trade agreements with the United States. The authors conclude that NAFTA raised external trade and foreign investment inflows and had a modest effect on Mexico’s average income per person. It is likely that NAFTA also helped achieve a modest reduction in poverty and an improvement in job quality. However, major obstacles remain to Mexico’s long term development—NAFTA is not enough. The main lesson for other countries is that free trade agreements offer opportunities to accelerate economic growth, but do not guarantee it.

for Latin America and the Caribbean

Lessons from NAFTA

Andres Solimano

An Empirical Macroeconomic Model for Policy Design

A RMSM-X Model for Chile

Andrés Solimano

This book presents the results of about three years of work finished in early 1992 in the area of private investment and macroeconomic adjustment. Its purpose is to explore the macroeconomic determinants of investment and the causes and cures for the gap between maroeconomic adjustment and stabilization and the resumption of economic growth in developing countries, a gap that even today - 10 years after the debt crisis and the subsequent adjustment of the eighties - remains wide. This volume highlights the central role of capital formation (public and private) in the restoration of sustainable growth.

The Role of Capital Formation

Striving for Growth After Adjustment

Edwin Goni

Humberto Lopez

Getting real about inequality : evidence from Brazil, Colombia, Mexico and Peru

Klaus Schmidt-Hebbel

World Bank Technical Paper No. 349. The Bank's approach to water resources development has shifted from one of construction activities to one of improved management quality, creating a new generation of water-related projects and the need for new evaluation procedures. This paper addresses the methodology for economic evaluation of this new group of projects and draws on the experience of the recently approved Mexico Water Resources Management project.

Puzzles and Policies

Saving Across the World

Norman Loayza

The authors investigate the policy and non-policy factors behind saving disparities, using a large panel data set and an encompassing approach including several relevant determinants of private saving. They extend the literature in several dimensions, by: 1) Using the largest data set on aggregate saving assembled to date. 2) Using panel instrumental variable techniques to correct for endogeneity and heterogeneity. 3) Performing robustness checks on changes in estimation procedures, data samples, and model specification. Their main empirical findings: a) Private saving rates show considerable inertia (are highly serially correlated even after controlling for other relevant factors). b) Private sector rates rise with the level and growth rate of real per capita income. So policies that spur development are in indirect but effective way to raise private saving rates. c) Predictions of the life-cycle hypothesis are supported in that dependency ratios generally have a negative effect on private saving rates. d) The precautionary motive for saving is supported by the finding that inflation - conventionally taken as a summary measure of macroeconomic volatility - has a positive impact on private saving, holding other facts constant. e) Fiscal policy is a moderately effective tool for raising national saving. F) the direct effect of financial liberalization are largely detrimental to private saving rates. Greater availability of credit reduces the private saving rate; financial depth and higher real interest rates do not increase saving.

What Drives Private Saving Around the World?

Luis Serven

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