The Quality of Life Public Disclosure Authorized in Latin American Cities MARKETS AND PERCEPTION Public Disclosure Authorized Edited by Eduardo Lora Andrew Powell Bernard M.S. van Praag Pablo Sanguinetti Public Disclosure Authorized Public Disclosure Authorized The Quality of Life in Latin American Cities The Quality of Life in Latin American Cities MARKETS AND PERCEPTION Edited by Eduardo Lora Andrew Powell Bernard M.S. van Praag Pablo Sanguinetti a copublication of the inter-american development bank and the world bank © 2010 The Inter-American Development Bank 1300 New York Avenue NW Washington DC 20577 Telephone: 202-263-1000 Internet: www.iadb.org E-mail: [email protected] All rights reserved 1 2 3 4 13 12 11 10 A copublication of the Inter-American Development Bank and the World Bank. The Inter-American Development Bank The World Bank 1300 New York Avenue NW 1800 H Street NW Washington DC 20577 Washington DC 20433 The views and opinions expressed in this publication are those of the authors and do not necessarily reflect the position of the Inter-American Development Bank. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington DC 20433, USA; fax: 202-522- 2422; e-mail: [email protected]. ISBN: 978-0-8213-7837-3 eISBN: 978-0-8213-8213-4 DOI: 10.1596/978-0-8213-7837-3 Library of Congress Cataloging-in-Publication Data The quality of life in Latin American cities : markets and perception / edited by Eduardo Lora ... [et al.]. p. cm.—(Latin American development forum series) “A Copublication of the Inter-American Development Bank and the World Bank.” Includes bibliographical references and index. ISBN 978-0-8213-7837-3—ISBN 978-0-8213-8213-4 (electronic) 1. Quality of life—Latin America. 2. Cities and towns—Latin America. 3. Latin America—Social conditions. 4. Latin America—Economic conditions. I. Lora, Eduardo. II. World Bank. HN110.5.A8Q33 2010 306.09728'091732—dc22 2010002327 Cover: Ultra Designs. Latin American Development Forum Series This series was created in 2003 to promote debate, disseminate information and analysis, and convey the excitement and complexity of the most topical issues in economic and social development in Latin America and the Carib- bean. It is sponsored by the Inter-American Development Bank, the United Nations Economic Commission for Latin America and the Caribbean, and the World Bank. The manuscripts chosen for publication represent the highest quality in each institution’s research and activity output and have been selected for their relevance to the academic community, policy makers, researchers, and interested readers. Advisory Committee Members Alicia Bárcena Ibarra, Executive Secretary, Economic Commission for Latin America and the Caribbean, United Nations Inés Bustillo, Director, Washington Office, Economic Commission for Latin America and the Caribbean, United Nations José Luis Guasch, Senior Adviser, Latin America and the Caribbean Region, World Bank; and Professor of Economics, University of California, San Diego Santiago Levy, Vice President for Sectors and Knowledge, Inter-American Development Bank Eduardo Lora, Chief Economist (a.i.) and General Manager, Research Department, Inter-American Development Bank Luis Servén, Research Manager, Development Economics Vice Presidency, World Bank Augusto de la Torre, Chief Economist, Latin America and the Caribbean Region, World Bank v Titles in the Latin American Development Forum Series The Quality of Life in Latin American Cities: Markets and Perception (2010) by Eduardo Lora, Andrew Powell, Bernard M.S. van Praag, Pablo Sanguinetti, editors Discrimination in Latin America: An Economic Perspective (2010) by Hugo Ñopo, Alberto Chong, and Andrea Moro, editors The Promise of Early Childhood Development in Latin America and the Caribbean (2010) by Emiliana Vegas and Lucrecia Santibáñez Job Creation in Latin America and the Caribbean: Trends and Policy Challenges (2009) by Carmen Pagés, Gaëlle Pierre, and Stefano Scarpetta China’s and India’s Challenge to Latin America: Opportunity or Threat? (2009) by Daniel Lederman, Marcelo Olarreaga, and Guillermo E. Perry, editors Does the Investment Climate Matter? Microeconomic Foundations of Growth in Latin America (2009) by Pablo Fajnzylber, José Luis Guasch, and J. Humberto López, editors Measuring Inequality of Opportunities in Latin America and the Caribbean (2009) by Ricardo de Paes Barros, Francisco H. G. Ferreira, José R. Molinas Vega, and Jaime Saavedra Chanduvi The Impact of Private Sector Participation in Infrastructure: Lights, Shadows, and the Road Ahead (2008) by Luis Andres, José Luis Guasch, Thomas Haven, and Vivien Foster Remittances and Development: Lessons from Latin America (2008) by Pablo Fajnzylber and J. Humberto López, editors vii viii titles in the series Fiscal Policy, Stabilization, and Growth: Prudence or Abstinence? (2007) by Guillermo Perry, Luis Servén, and Rodrigo Suescún, editors Raising Student Learning in Latin America: Challenges for the 21st Century (2007) by Emiliana Vegas and Jenny Petrow Investor Protection and Corporate Governance: Firm-Level Evidence Across Latin America (2007) by Alberto Chong and Florencio López-de- Silanes, editors Natural Resources: Neither Curse nor Destiny (2007) by Daniel Lederman and William F. Maloney, editors The State of State Reform in Latin America (2006) by Eduardo Lora, editor Emerging Capital Markets and Globalization: The Latin American Expe- rience (2006) by Augusto de la Torre and Sergio L. Schmukler Beyond Survival: Protecting Households from Health Shocks in Latin America (2006) by Cristian C. Baeza and Truman G. Packard Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability (2005) by José Antonio Ocampo, editor Privatization in Latin America: Myths and Reality (2005) by Alberto Chong and Florencio López-de-Silanes, editors Keeping the Promise of Social Security in Latin America (2004) by Indermit S. Gill, Truman G. Packard, and Juan Yermo Lessons from NAFTA: For Latin America and the Caribbean (2004) by Daniel Lederman, William F. Maloney, and Luis Servén The Limits of Stabilization: Infrastructure, Public Deficits, and Growth in Latin America (2003) by William Easterly and Luis Servén, editors Globalization and Development: A Latin American and Caribbean Per- spective (2003) by José Antonio Ocampo and Juan Martin, editors Is Geography Destiny? Lessons from Latin America (2003) by John Luke Gallup, Alejandro Gaviria, and Eduardo Lora About the Editors Eduardo Lora is the chief economist (a.i.) and general manager of the Research Department at the Inter-American Development Bank (IDB). He received his master of science degree from the London School of Economics and was a visiting researcher at Oxford University in 1989. Before joining the Bank in 1996, he served five years as executive director of Fedesarrollo in Bogotá, Colombia. He has written several textbooks, edited more than a dozen books on economic and social policy issues, and served as academic coordinator of six editions of the IDB’s flagship annual publication. He writes a column in the Colombian magazine Dinero and has published numerous academic articles. Andrew Powell is regional economic adviser of the Caribbean Country Department of the Inter-American Development Bank and was previously lead research economist of the IDB’s Research Department. Awarded a doctorate from the University of Oxford, he has served as chief economist of the Central Bank of Argentina and as a consultant to the IDB, Interna- tional Monetary Fund (IMF), the World Bank, and several governments. His recent papers in academic journals include work on the Argentine crisis, the role of the IMF, the behavior of international banks, dollariza- tion, and Basel II and emerging countries. He has also published work on commodity price behavior, regulation, and banking. Bernard M.S. van Praag is Emeritus University Professor of Economics at the University of Amsterdam. He has published numerous papers and several monographs on the measurement of happiness, econometric meth- ods, poverty, social security, and health. He is also coauthor, with Ada Ferrer-i-Carbonell, of Happiness Quantified (Oxford University Press, 2004), already a standard reference in its field. Founding president of the European Society for Population Economics (ESPE) and former coeditor of the Journal of Population Economics, he has also served as associate editor of the Journal of Health Economics and as a consultant to the Dutch government. ix x about the editors Pablo Sanguinetti is research director of the Corporación Andina de Fomento (CAF) and professor of economics at Universidad Torcuato Di Tella in Buenos Aires, Argentina. He received his Ph.D in economics from the University of California, Los Angeles. His varied research includes economic reform in Latin