The Case for Optimism amid the Crisis

The current financial crisis in the United States raises a fundamental question: are these crises good or bad for long term growth? Some economists believe that crises have negative consequences for long run growth because of increased volatility and wealth destruction. Others believe that crises are opportunities to learn, reform and improve economic and political institutions. This view tends to see crises as a natural and potentially desirable phenomenon in the process of development, which allows important reforms to take place.

Do Ratings Matter?

The role of Credit Rating Agencies has come to the forefront of the policy debate in recent months. The sudden collapse of complex structured financial instruments that were once categorized as safe “investment grade” products has cast doubts on the way rating agencies do their business, the structure of incentives they face, and the appropriateness of the existing regulatory framework and surveillance mechanisms.

How to Spend $10 billion in Latin America and the Caribbean

If Latin American and Caribbean governments had $10 billion to solve their most urgent problems, how should they spend it? Last week, the Inter-American Development Bank (IDB), in a joint venture with the Copenhagen Consensus Center (CCC) and the INCAE business school, organized the Consulta de San José, in the capital city of Costa Rica. […]

Getting Ready for the Next Catastrophe

In the past week, the volatility in financial markets was not the only storm to hit the region: Hurricane Dean, a category 5 wind-storm (the strongest in the scale) wiped through the Caribbean region leaving a trail of human and economic losses across Haití, Dominica, Santa Lucía, República Dominicana, Jamaica and Mexico’s Yucatan peninsula. And […]

The Cost of Financing

In my previous posting I argued that it is important to focus the attention back on private investment in Latin America. It is well known that a necessary condition for private investment to become an engine of growth is that property rights are well protected, and that the business environment is good enough to attract […]

A Thought on Private Investment

Fellow blogger Alex Uriarte has called our attention on the issue of the quality of investment. The focus of his posting is, understandably, on public investment as this is the variety that is currently fashionable in Latin America. Governments throughout the region have, in recent years, taken a more interventionist stance and have sought to […]