Review economic commission foR Latin ameRica and the caRibbean NO104 AUGUST • 2011 Alicia Bárcena Executive Secretary Antonio Prado Deputy Executive Secretary Review economic commission foR Latin ameRica and the caRibbean Osvaldo Sunkel Chairman of the Editorial Board André Hofman Director Miguel Torres Technical Editor issn 0251-2920 The CEPAL Review was founded in 1976, along with the corresponding Spanish version, Revista de la CEPAL , and is published three times a year by the United Nations Economic Commission for Latin America and the Caribbean, which has its headquarters in Santiago, Chile. The Review, however, has full editorial independence and follows the usual academic procedures and criteria, including the review of articles by independent external referees. The purpose of the Review is to contribute to the discussion of socio-economic development issues in the region by offering analytical and policy approaches and articles by economists and other social scientists working both within and outside the United Nations. The Review is distributed to universities, research institutes and other international organizations, as well as to individual subscribers. The opinions expressed in the signed articles are those of the authors and do not necessarily reflect the views of the organization. The designations employed and the way in which data are presented do not imply the expression of any opinion whatsoever on the part of the secretariat concerning the legal status of any country, territory, city or area or its authorities, or concerning the delimitation of its frontiers or boundaries. A subscription to the CEPAL Review in Spanish costs US$ 30 for one year (three issues) and US$ 50 for two years. A subscription to the English version costs US$ 35 or US$ 60, respectively. The price of a single issue in either Spanish or English is US$ 15, including postage and handling. The complete text of the Review can also be downloaded free of charge from the eclac web site (www.cepal.org). This publication, entitled the CEPAL Review, is covered in the Social Sciences Citation Index (SSCI), published by Thomson Reuters, and in the Journal of Economic Literature (JEL ), published by the American Economic Association To subscribe, please apply to eclac Publications, Casilla 179-D, Santiago, Chile, by fax to (562) 210-2069 or by e-mail to [email protected]. The subscription form may be requested by mail or e-mail or can be downloaded from the Review’s Web page: http://www.cepal.org/revista/noticias/paginas/5/20365/suscripcion.pdf. United Nations publication ISSN 0251-2920 ISBN 978-92-1-021079-9 e-ISBN 978-92-1-055008-6 LC/G.2498-P Copyright © United Nations, August 2011. All rights reserved. Printed in Santiago, Chile Requests for authorization to reproduce this work in whole or in part should be sent to the Secretary of the Publications Board. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and to inform the United Nations of such reproduction. In all cases, the United Nations remains the owner of the copyright and should be identified as such in reproductions with the expression “© United Nations 2008” (or other year as appropriate). CEPAL REVIEW 104 A RTICLES Macroeconomy for development: countercyclical policies and production sector transformation 7 José Antonio Ocampo Latin America: school bullying and academic achievement 37 Marcela Román and F. Javier Murillo Tourism competitiveness in the Caribbean 55 Bineswaree Bolaky Argentina: householdsand labour market changes (2004-2009) 77 Fernando Groisman Argentine industry in the early twenty-first century (2003-2008) 99 Germán Herrera and Andrés Tavosnanska Productivity differencesin Brazilian manufacturing firms, by industrial sector 119 Ronivaldo Steingraber and Flávio Gonçalves Innovation, R&D investment and productivity in Chile 135 Roberto Álvarez, Claudio Bravo-Ortega and Lucas Navarro The quality gap in Chile’s education system 161 José Luis Drago and Ricardo D. Paredes Colombia: public capitaland manufacturing productivity 175 Sergio Jiménez R. and Jaime Sanaú V. Maquila, currency misalignment and export-led growth in Mexico 191 Carlos A. Ibarra Guidelines for contributors to CEPAL Review 207 AUGUST 2011 Explanatory notes The following symbols are used in tables in the Review: … Three dots indicate that data are not available or are not separately reported. (–) A dash indicates that the amount is nil or negligible. A blank space in a table means that the item in question is not applicable. (-) A minus sign indicates a deficit or decrease, unless otherwise specified. (.) A point is used to indicate decimals. (/) A slash indicates a crop year or fiscal year; e.g., 2006/2007. (-) Use of a hyphen between years (e.g., 2006-2007) indicates reference to the complete period considered, including the beginning and end years. The word “tons” means metric tons and the word “dollars” means United States dollars, unless otherwise stated. References to annual rates of growth or variation signify compound annual rates. Individual figures and percentages in tables do not necessarily add up to the corresponding totals because of rounding. 7 CEPAL REVIEW 104 • AUGUST 2011 KEYWORDS This article is based on a keynote lecture delivered at the Economic Commission for Latin Macroeconomics America and the Caribbean (ECLAC ) in Santiago, Chile, on 12 April 2011 on the occasion of the tenth lecture in the Raúl Prebisch Memorial Lecture Series. Economic development ECLAC Economic analysis Economic policy Macroeconomy for Monetary policy Fiscal policy development: countercyclical Balance of payments Exchange rates Diversification of production policies and production sector Innovations Development strategies Latin America transformation José Antonio Ocampo The argument that I will be making here is that the key to a well-designed macroeconomic policy for development is a mix of sound countercyclical policies and a proactive strategy for diversifying production structures. These two concepts are deeply rooted in ECLAC thinking. Countercyclical policies must withstand the challenges posed by abrupt external financing cycles and sharp fluctuations in commodity prices. Fiscal policy is of pivotal importance, but it must be coupled with equally countercyclical monetary and exchange-rate policies. In the light of the experience over the past decade, this policy mix seems to be achievable if intermediate exchange regimes are introduced alongside macroprudential policies, including regulation of José Antonio Ocampo Professor and member of the capital flows. At the same time, the strategy used to spur the development Committee on Global Thought of the production sector should foster innovative economic activities that at Columbia University and former Executive Secretary of the generate domestic production linkages. The concept of innovation must be Economic Commission for Latin understood in a broad sense, but the critical test is its contribution to the America and the Caribbean (ECLAC ) accumulation of technological capabilities. ✒ [email protected] 8 CEPAL REVIEW 104 • AUGUST 2011 I Introduction The recent international financial crisis has been a trial crucial for use to correctly interpret the significance of by fire for macroeconomic analysis, just as the Great the factors that have helped us to do so. Depression of the 1930s was. The orthodox economic Macroeconomic analysis arose out of the need to ideas about self-regulating markets that had prevailed understand short-run macroeconomic dynamics, but later in the years leading up to each of these crises did not on it came to encompass the analysis of economic growth. emerge from them unscathed. The Great Depression The core ideas in this respect emerged in the 1940s and also spawned what we now call macroeconomic 1950s and were elaborated upon in the following decades. analysis, which came to the fore under the intellectual The idea that took centre-stage had to do with the role of leadership of John Maynard Keynes. Unfortunately, technological change as an engine of growth, although macroeconomic thought has not always remained loyal it was also closely tied to the concept of physical and to his legacy. Concern about the possible inflationary human capital formation. For the developing countries, effects of Kenyesian monetary and fiscal activism was this analysis was, from the very start, associated with at the root of the new orthodoxies that arose in the form three other concepts: (i) the role of surplus labour and the of monetarism in the 1950s and 1960s. The recent crisis dualism in labour markets to which it gives rise (which has led to a revival of Keynesian thought, particularly ties in very closely with the work of the Caribbean with respect to his ideas about the inherent instability economist W. Arthur Lewis); (ii) the idea that balance-of- of financial systems and the predominant role played by payments constraints play a critical role in the short-term aggregate demand in determining the levels of economic and long-term macroeconomic dynamics of developing activity and employment. countries; and (iii) the crucial role of industrialization For the developing world, in general, and for as a mechanism for the transmission of technological Latin America, in particular, crises have also spurred progress. This last mechanism operates, in part, via the development of new economic ideas and practices. investment in machinery and equipment,