The Long Shadow of Spanish Colonialism

William Maloney has a new paper with Felipe Valencia Caicedo called “Engineers, Innovative Capacity and Development in the Americas.”  I’ve been a fan of Maloney’s work since I read “Missed Opportunities: Innovation and Resource Based Growth in Latin America” in Economía in 2002.  (Wait, didn’t I show something similar in 1997?  Maybe the “fan” feeling doesn’t run both directions!)

Here’s the abstract of the new working paper:

Using newly collected national and sub-national data, and historical case studies, this paper argues that differences in innovative capacity, captured by the density of engineers at the dawn of the Second Industrial Revolution, are important to explaining present income differences, and, in particular, the poor performance of Latin America relative to North America. This remains the case after controlling for literacy, other higher order human capital, such as lawyers, as well as demand side elements that might be confounded with engineering. The analysis then finds that agglomeration, certain geographical fundamentals, and extractive institutions such as slavery affect innovative capacity. However, a large effect associated with being a Spanish colony remains suggesting important inherited factors.




What progress looks like (Latin American Edition)

This photo claiming to compare the presidents of Argentina, Chile & Brazil today with those in the 1970s  is making the rounds on Twitter:



While the exact picture is false (the three stooges in the bottom panel are the military junta that governed Chile before Pinochet broke up the band to go solo), the idea is exactly correct.

In the mid-70s, all three countries were “led” by Military dictatorships, though in Brazil, the President was chosen by the military and then “approved” by the Legislature. And now the three countries are led by women who won reasonably free and fair elections.

Here are pics of the actual dudes who were military dictators as of 1976 in the three countries (some are taken post-dictatorship):


Latin American News Round-Up

1. Mexico’s main opposition party quits energy talks amid graft scandal

2. Yelp launches in Mexico to Extend Latin American Footprint

3. Is Latin America’s IT Startup Scene Stuck in Neutral?

4. San Hugo Chavez and San Naza Moreno: Latin America’s Newest Saints

5. Soaring Prices Fuel Frustrations Among Weary Argentines


Latin American News Round-Up

1. Impressions from Venezuela Institutional Deterioration, Violence and Social Unrest

2. Authorities hope drug lord’s arrest will expose corruption (well, maybe some authorities hope that…)

3. Political hatred in Argentina

4. In Struggles of Artist With His Work, Hints of Mexico’s Own

5. The Kingpin at Rest (by Alma Guillermoprieto, self-recommending)

Continental Divide

Mexico, Colombia, Peru & Chile are on the way to creating a large single market (over 200 million people) with the recently ehanced Pacific Alliance. Costa Rica and Panama want in.

I think they call it the Pacific Alliance because Argentina, Venezuela and Brazil are Atlantic nations which are the backbone of the less ambitious Mercosur pact.

It may also be code for “hey Asia, we are open for business”, like our own likely still-born Trans Pacific Partnership.


Ringing in the New Year with Yellow Underwear

I read a fun article recently about Latin America’s New Years traditions.  To cover all your bases, it seems like you should do the following:

1. If you are a Chilena, make sure to wear your best yellow underpants (seriously).  Apparently the color is supposed to represent the sun, “which is viewed as the basis of life, prosperity and abundance on earth.”

I’m no expert, but I don’t think yellow is a very popular color of underpants in the US.  No worries though if you are in Chile–check out this awesome stand of yellow panties:


Now there are variations to the yellow color.  The article notes that ladies often wear red in order to attract love in the new year.  Also, “a group of Bolivians also tried to encourage wearing green underwear as a sign of hope.”  This is a curious statement.  I wonder who this group is, what their motives are (are they producers of green underpants?), and whether they were ultimately successful.  And lastly (and also strangely),  “it has become customary to wear coloured underwear inside out” in Peru.

2. Eat 12 grapes as fast as you can and try to make it to the new year by not choking to death.  This comes from Spain but has been widely adopted in LA.  According to the article “while eating grapes on New Year’s is popular all over Latin America, making wishes is characteristically Venezuelan.”

3.  Wash down those grapes with a big spoonful of lentils.  This apparently “ensures the year to come is filled with prosperity and abundance.”  And really, what goes better with grapes than lentils?

4.  Now, grab your luggage and run around the block (again, seriously).  I’m not sure how many countries actually do this as a ritual but according to the article it is supposed to “ensure safe and abundant travels in the New Year.”  And I guess if you don’t have any luggage to run with, you are unlikely to be traveling very far anyway?

5. Light something on fire.  More specifically, a rag doll representing the old, crappy year you just finished.  In some regions you can also burn other memorabilia like photos to “let go” of the last year and start fresh.  The person in the photo below apparently had a lot to “let go” of.  Looks like he or she is scaring the neighbors.


I’m sorry to say that I didn’t do any of the above rituals but I’m still hoping 2014 will work out ok for me.

Update:  The WSJ published a list today of the top 4 weirdest New Year traditions.  Strangely, Chile takes the #1 slot but not for the yellow underpants.

1. Chile: visiting dead relatives in a graveyard.  This doesn’t seem that strange to me.

2. Romania: trying to talk to animals.  I talk to my dog all the time, not just on New Year’s day.  I guess the strange part would be if they started talking back.

3. Ireland: banging bread on the wall to scare off malevolent spirits. Maybe the spirits are sensitive to gluten.

4. Hillbrow, South Africa:  chucking furniture out your window.  How can this only be #4 on the list?  ‘

The WSJ has some great quotes in the piece. Here are some of my favorites:

a. Let’s start with the funny sub-title: “Hazardous Habit Collides With Drive to Gentrify Johannesburg’s Crime-Ridden Core.”  I guess that would be at odds with gentrification.

b. “The 36-year-old technician said he once put aside used items, such as a rusty stove, an old TV set or worn-out clothes to throw off his balcony on Dec. 31. But rising rents make furniture-tossing unaffordable as well as illegal.”  What’s New Year’s Eve without throwing a stove off your balcony?  A bad way to start the new Year is what it is.

c. “Several years ago, a small refrigerator struck someone on the head and body.”  That pretty much covers the whole person, no?  head and body?

d. “Police told residents—many of whom are immigrants from other parts of Africa—that hurling furniture off balconies could hurt family members or neighbors.” The idea that you would have to tell anyone this is pretty funny, but the article makes it sound like it’s the fact that the residents are immigrants which makes this lecture necessary.  I guess the immigrants aren’t hip to the laws of gravity that afflict South Africa alone.

alright, I guess that’s enough snark to start off the new year.  now back to work…

Room for improvement

Andres Oppenheimer has a recent article on endless litigation in Latin America.  Specifically, he looks at the World Bank’s Doing Business Report for 2014, which ranks 189 countries in terms of how difficult it is to do things like enforce contracts.

The ranking shows that Latin America as a whole has some serious room for improvement.  As Oppenheimer reports, “it shows that it’s easier to enforce a contract between two domestic private businesses in Communist China or corruption-ridden Russia than in Brazil, Mexico, Colombia, Argentina and virtually any other Latin American country.”

So let’s look at some specifics:

Contract enforcement: Russia 10, China 19, Argentina 57, Chile 64, Mexico 71, Venezuela 92, Ecuador 99, Peru and Uruguay 105, Panama 127, Brazil 121, Colombia 155 and Honduras 182.  I’m curious about Russia’s ranking of 10.  Does contract enforcement include extra-legal enforcement?

# of Days it takes to Enforce a Contract: Russia 270, Mexico 400, China 460, Peru 426, Chile 480, Argentina 590, Venezuela 610, Uruguay 725, Brazil 731, Colombia 1,288, and Guatemala 1,402.  My thoughts:  (1) way to go Mexico; and (2) same question w.r.t Russia–does this include knee-capping as a means of enforcement?

Average legal fees to enforce a contract (as a % of the total value of the contract): China 11, Russia 13, Brazil 16, Argentina 20, Chile 29, Mexico 31, Peru 36, Venezuela 44, Colombia 48, and Panama 50.  The Panamanian score surprises me for some reason.  Mexico isn’t too hot on this ranking either.  I’ll shut up now about Russia.

Not surprisingly, East Asian countries are leading the way in contract enforcement.  Oppenheimer notes that:

“In Singapore and South Korea, once chaotic and corruption-ridden countries, it only takes an average of 150 and 230 days, respectively, to enforce a contract, according to the report. In the United States, it takes an average of 370 days. 

Asian countries such as Malaysia are creating groups of judges who are highly specialized in commercial litigation and can thus do their jobs faster and better.

South Korea also has sped up litigation considerably by creating e-courts, where lawsuits are filed electronically. Virtually all court procedures can be done online 24 hours a day, 7 days a week. South Korea launched its electronic case filing system in 2010, and about half of its civil cases are currently e-filed, saving a lot of time and money, Lobet said. By conducting litigation electronically, South Korea uses less paper, eliminates the need for storage space, and — most importantly — makes it easier to access documents.”

We debate how replicable the East Asian miracle is in development.  A lot of elements of the miracle are indeed hard (or impossible) to transplant, but I would think that following the East Asian lead on these kind of issues would be both do-able and advisable.

Crime in Latin America

InsightCrime has had some great articles recently on crime & violence in Latin America.  Here is a link to the ones I found most interesting:

1. Southern Pulse: The Politics of Corruption in Guatemala

2. How Street Gangs Have Complicated Mexico Security

3. The Mara Women: Gender Roles in Central American Street Gangs

4. Brazil’s Military Police: Calls for Demilitarization

Latin American News Round Up

1. From tragedy to defending champs, Juarez Football team makes a comeback  Three years ago, “gunmen killed two players and injured several more as they celebrated a birthday in a notorious attack in Ciudad Juarez.”

2. A button in Brazil may change a culture. “The electronic devices use GPS technology to quickly signal that a woman needs help, and they transmit images that help police track down the attacker.”

3. As a Boom Slows, Peru Grows Uneasy.  “Hey, wait a minute, we were going to be the next Inca tiger, what a disappointment.”

4. Mexico Chamber of Deputies Approves Professional Teaching Service Act. “Lawmakers from the opposition parties argued that this is a “legislative albazo” [“strike at dawn”], given the conditions that Congress finds itself surrounded by demonstrations against the education reform in the context of Enrique Peña Nieto’s first government report.”

5. Which is scarier – Brazil’s taxman or a murderous husband?  “Tax code on your receipt, madam?” Customer: “On a bill this size? God forbid, my husband would kill me!”