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The authors describe the evolution of relative wages in five Latin American countries-Argentina, Brazil, Chile, Colombia, and Mexico. They use repeated cross-sections of household surveys, and decompose the evolution of relative wages into factors associated with changes in relative supply and relative demand. The authors have three main conclusions: 1) Increases in the relative wages of the most skilled (university-educated) workers took place concurrently with increases in their relative abundance in all of the countries except Brazil. This is strong evidence of increases in the demand for skilled workers. 2) Increases in the wage bill of skilled workers occurred largely within sectors, and in the same sectors in different countries, which is consistent with skill-biased technological change. 3) Trade appears to be an important transmission mechanism. Increases in the demand for the most skilled workers took place at a time when countries in Latin America considerably increased the penetration of imports, including imports of capital goods. The authors show that changes in the volume and research and development intensity of imports are significantly related to changes in the demand for more skilled workers in Latin America. Their research complements earlier work on the effects of technology transmitted through trade on productivity and on the demand for skilled labor.
Sanchez-Paramo and Schady describe the evolution of relative wages in five Latin American countries - Argentina, Brazil, Chile, Colombia, and Mexico. They use repeated cross-sections of household surveys, and decompose the evolution of relative wages into factors associated with changes in relative supply and relative demand. The authors have three main conclusions:- Increases in the relative wages of the most skilled (university-educated) workers took place concurrently with increases in their relative abundance in all of the countries except Brazil. This is strong evidence of increases in the demand for skilled workers.- Increases in the wage bill of skilled workers occurred largely within sectors, and in the same sectors in different countries, which is consistent with skill-biased technological change.- Trade appears to be an important transmission mechanism. Increases in the demand for the most skilled workers took place at a time when countries in Latin America considerably increased the penetration of imports, including imports of capital goods.The authors show that changes in the volume and research and development intensity of imports are significantly related to changes in the demand for more skilled workers in Latin America. Their research complements earlier work on the effects of technology transmitted through trade on productivity and on the demand for skilled labor.This paper - a product of Public Services, Development Research Group - is part of a larger effort in the group to understand the impact of globalization on human capital outcomes.
While adoption of new technologies is understood to enhance long-term growth and average per-capita incomes, its impact on lower-skilled workers is more complex and merits clarification. Concerns abound that advanced technologies developed in high-income countries would inexorably lead to job losses of lower-skilled, less well-off workers and exacerbate inequality. Conversely, there are countervailing concerns that policies intended to protect jobs from technology advancement would themselves stultify progress and depress productivity. This book squarely addresses both sets of concerns with new research showing that adoption of digital technologies offers a pathway to more inclusive growth by increasing adopting firms’ outputs, with the jobs-enhancing impact of technology adoption assisted by growth-enhancing policies that foster sizable output expansion. The research reported here demonstrates with economic theory and data from Argentina, Brazil, Chile, Colombia and Mexico that lower-skilled workers can benefit from adoption of productivity-enhancing technologies biased towards skilled workers, and often do. The inclusive jobs outcomes arise when the effects of increased productivity and expanding output overcome the substitution of workers for technology. While the substitution effect replaces some lower-skilled workers with new technology and more highly-skilled labor, the output effect can lead to an increase in the total number of jobs for less-skilled workers. Critically, output can increase sufficiently to increase jobs across all tasks and skill types within adopting firms, including jobs for lower-skilled workers, as long as lower-skilled task content remains complementary to new technologies and related occupations are not completely automated and replaced by machines. It is this channel for inclusive growth that underlies the power of pro-competitive enabling policies and institutions—such as regulations encouraging firms to compete and policies supporting the development of skills that technology augments rather than replaces—to ensure that the positive impact of technology adoption on productivity and lower-skilled workers is realized.
Discusses the relationship between trade and employment and the way in which trade policies and labour market policies affect this relationship.
Disconnected is a path-breaking analysis of the relationship between schooling and employers in Latin America. It is sophisticated in its design, using multiple surveys and multiple methods. It distinguishes carefully among different types of skills and the relationship of each type to employment outcomes and employer needs. It examines both the demand and the supply side of the labor market. And it provides guidance for further work. We commend this book to all readers, scholars, and practitioners concerned with schooling and job markets in Latin America.
The economies of developing countries today are highly integrated into world markets. Trade volumes in relation to the overall size of the economy are often much higher in developing countries than in industrial ones. The question that emerges from this trend is, "What impact does international trade have on economic growth and distribution in developing countries?" In order to answer this question the present study derives empirical testable hypotheses from theoretical models thereby bridging the existing gap between theory and empirical studies. A broad range of trade variables derived from a growth model incorporating features from the new growth theories suggest adeeperaY effects of trade on economic development that go beyond the standard "openness" correlations. Likewise, the simulation of a trade reform on goods and factor prices shows insightful results on welfare changes for various Thai household categories. The distributional impacts do not correspond with the simple dichotomy of the rich getting richer and the poor becoming poorer.
The fundamental elements to unlocking the potential of technology to speed up economic growth in Latin America and the Caribbean (LAC) are investing in education, opening up new technologies through foreign trade and investment, and encouraging private sector research and development. 'Closing the Gap in Education and Technology' advises Latin American and Caribbean governments to address the region's deficits in skills and technology, and thereby boost productivity, ultimately improving growth prospects. To close this 'productivity gap' in the region, the report calls for a range of policy approaches and strategies, depending on a country's level of development. It identifies three progressive stages in a country's technological evolution -- adoption, adaptation, and creation -- and observes that policies should be designed to address the particular challenges that accompany each stage.In conclusion, 'Closing the Gap in Education and Technology' argues that many countries in the Latin American and Caribbean region have been improving education and social risk management systems so that they are now ready to benefit from the rewards associated with creating stronger trade and technology ties with countries that are more technologically advanced.
Watson, Crawford, and Farley examine the ways in which science and technology (S & T) support poverty alleviation and economic development and how these themes have been given emphasis or short shrift in various areas of the World Bank's work. Central to their thesis is the now well-established argument that development will increasingly depend on a country's ability to understand, interpret, select, adapt, use, transmit, diffuse, produce, and commercialize scientific and technological knowledge in ways appropriate to its culture, aspirations, and level of development. The authors go beyond this tenet, analyzing the importance of S & T for development within specific sectors. They present policy options for enhancing the effectiveness of S & T systems in developing countries, review previous experience of the World Bank and other donors in supporting S & T, and suggest changes that the World Bank and its partners can adopt to increase the impact of the work currently undertaken in S & T. The authors' main messages are: * S & T has always been important for development, but the unprecedented pace of advancement of scientific knowledge is rapidly creating new opportunities for and threats to development. * Most developing countries are largely unprepared to deal with the changes that S & T advancement will bring. * The World Bank's numerous actions in various domains of S & T could be more effective in producing the needed capacity improvements in client countries. * The World Bank could have a greater impact if it paid increased attention to S & T in education, health, rural development, private sector development, and the environment. The strategy emphasizes four S & T policy areas: education and human resources development, the private sector, the public sector, and information communications technologies. The paper--a joint product of the Education Team, Human Development Network, and the Environmentally and Socially Sustainable Development Vice Presidency--is part of a larger effort in the Bank to engage client countries in an active science and technology dialogue while increasing awareness of the centrality of these issues to the Bank's work.
Abstract: Chen and Ravallion use China's national household surveys for rural and urban areas to measure and explain the welfare impacts of the changes in goods and factor prices attributed to WTO accession. Price changes are estimated separately using a general equilibrium model to capture both direct and indirect effects of the initial tariff changes. The welfare impacts are first-order approximations based on a household model incorporating own-production activities and are calibrated to the household-level data imposing minimum aggregation. The authors find negligible impacts on inequality and poverty in the aggregate. However, diverse impacts emerge across household types and regions associated with heterogeneity in consumption behavior and income sources, with possible implications for compensatory policy responses. This paper"a product of the Poverty Team, Development Research Group"is part of a larger effort in the group to assess the household welfare impacts of economywide policy changes.
Analyzing the experience of Mexico under the North American Free Trade Agreement (NAFTA), 'Lessons from NAFTA' aims to provide guidance to Latin American and Caribbean countries considering free trade agreements with the United States. The authors conclude that the treaty raised external trade and foreign investment inflows and had a modest effect on Mexico's average income per person. It is likely that the treaty also helped achieve a modest reduction in poverty and an improvement in job quality. This book will be of interest to scholars and policymakers interested in international trade and development.