Conference:Taxation and Economic Growth in Latin America

Brasilia, Brazil, March 5-6, 2012.Organized by the International Monetary Fund, Inter-American Center of Tax Administrations, and Receita Federal de Brasil. This conference aims to bring together policy makers and tax administration officials in the countries of Latin America.Taxation plays a fundamental role in promoting economic growth from different perspectives. On the one hand, fiscal resources to finance the government policies to further boost economic development. On the other hand, the design of tax policy and administration create the incentive framework for the development of private sector activities. This conference will provide a space for dialogue and exchange of experiences in these areas between those responsible for policy design and tax administration in the region and international organizations. The event aims to identify lessons on what has or has not worked in this field, as well as discuss the challenges facing the region in the field of taxation, for example, in relation to financial sector taxation and natural resources.

Conference:Taxation and Economic Growth in Latin America

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Avoiding the fragility trap in Africa

Not only do Africa's fragile states grow more slowly than non-fragile states, but they seem to be caught in a "fragility trap". For instance, the probability that a fragile state in 2001 was still fragile in 2009 was 0.95.

This paper presents an economic model where three features -- political instability and violence, insecure property rights and unenforceable contracts, and corruption -- conspire to create a slow-growth-poor-governance equilibrium trap into which these fragile states can fall.

The analysis shows that, by addressing the three problems, fragile countries can emerge from the fragility trap and enjoy a level of sustained economic growth. But addressing these issues requires resources, which are scarce because external aid is often tailored to the country's performance and cut back when there is instability, insecurity, and corruption.

The implication is that, even if aid is seemingly unproductive in these weak-governance environments, it could be hugely beneficial if it is invested in such a way that it helps these countries tackle the root causes of instability, insecurity, and corruption. Empirical estimations corroborate the postulated relationships of the model, supporting the notion that it is possible for African fragile countries to avoid the fragility trap.

World Bank.Author: Andrimihaja,Noro Aina;Cinyabuguma,Matthias; Devarajan,Shantayanan. Document Date: 2011/11/01. Document Type: Policy Research Working Paper.Report Number: WPS5884. Volume No:  1 of 1

Avoiding the fragility trap in Africa

From growth to green growth -- a framework

Green growth is about making growth processes resource-efficient, cleaner and more resilient without necessarily slowing them. This paper aims at clarifying these concepts in an analytical framework and at proposing foundations for green growth.

The green growth approach proposed here is based on (1) focusing on what needs to happen over the next 5-10 years before the world gets locked into patterns that would be prohibitively expensive and complex to modify and (2) reconciling the short and the long term, by offsetting short-term costs and maximizing synergies and economic co-benefits. This, in turn, increases the social and political acceptability of environmental policies.

This framework identifies channels through which green policies can potentially contribute to economic growth. However, only detailed country- and context-specific analyses for each of these channels could reach firm conclusion regarding their actual impact on growth. Finally, the paper discusses the policies that can be implemented to capture these co-benefits and environmental benefits.

Since green growth policies pursue a variety of goals, they are best served by a combination of instruments: price-based policies are important but are only one component in a policy tool-box that can also include norms and regulation, public production and direct investment, information creation and dissemination, education and moral suasion, or industrial and innovation policies.

Author: Hallegatte,Stephane;Heal,Geoffrey;Fay,Marianne;Treguer,David. Document Date:2011/11/01. Document Type:Policy Research Working Paper. Report Number:WPS5872. Volume No: 1 of 1

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The Role of Structural Reforms in Raising Economic Growth in Central America

Central America experienced moderate growth during the last decade, including in the years leading up to the global financial crisis, but the rate of convergence toward advanced country income levels has still been slow. Moreover, forecasts imply that these trends will continue. What can be done to spur higher growth in Central America? We bring new data to bear on this question-version 7.0 of the Penn World Table and a new IMF database on structural reforms. Our cross-country panel regression of economic growth using System GMM captures the importance to growth of conditional convergence, factor accumulation, and macro policies.

In addition, structural efficiency is a significant factor in explaining growth performance. We construct a broad index of efficiency and find that increasing the degree of structural efficiency by one standard deviation raises growth by ½ percent. This implies that Central American countries could significantly increase their long-run growth rates by increasing the flexibility of markets and improving the quality of regulation

IMF. Swiston, Andrew ; Barrot, Luis-Diego. Authorized for Distribution: October 01, 2011. This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

The Role of Structural Reforms in Raising Economic Growth in Central America