Shifting Wealth and Skills in Latin America. José Ramón Perea Americas Desk OECD Development Centre APPAM Segovia, October 29th, 2014

Transcription

1 Shifting Wealth and Skills in Latin America José Ramón Perea Americas Desk OECD Development Centre APPAM Segovia, October 29th, 2014

2 Perspectivas Shifting Wealth económicas and skills de América in Latin Latina America 1 Shifting Wealth and skills 2 Skill demand in Latin America 3 Final thoughts and questions

3 Shifting La contribución Wealth: A de new la región geography al proceso of global de reequilibrio growth de la riqueza Share of the global economy in purchasing power parity terms, (% of global GDP, PPP basis) 65% 62% OECD member countries Non-member economies 60% 57% 55% 50% 45% 40% 35% 38% 43% 30%

4 La Shifting contribución Wealth: de A shock la región in L al leads proceso to a gradual de reequilibrio increase de in la global riqueza pool of es skills relativamente modesta Population by level of education (millions; ) 1,200,000 China 900,000 India 1,000, , , , ,000 terciaria completa terciaria incompleta secundaria completa secundaria incompleta primaria completa primaria incompleta sin formación 800, , , , , , , ,000 terciaria completa terciaria incompleta secundaria completa secundaria incompleta primaria completa primaria incompleta sin formación Source: Barro-Lee Database, The World Development Indicators (WDI)

5 La Shifting contribución Wealth: de demand la región of skills al proceso de reequilibrio de la riqueza Globally Technological change favours skill demand (skill-biased technical change) Trade and financial liberalization fosters the role of skills as the source of economic competitiveness (Lall, 2000). The previous points favour the rise of new modes or business and productive organizations, which also heighten the importance of skills in generating value. In Latin America For countries with natural resource endowments, Shifting Wealth intensifies their role as commodity exporters (i.e., goods with less skills embedded). All countries in the region face greater difficulty to develop comparative advantages in a wide range of manufacturing industries.

6 Perspectivas Shifting Wealth económicas and skills de América in Latin Latina America 1 Shifting Wealth and skills 2 Skill demand in Latin America 3 Final thoughts and questions

7 La Skill contribución demand in Latin de la America: región al empirical proceso de analysis reequilibrio over formal de la riqueza firms. Our question: Is it harder for Latin American firms to satisfy their demand for skills? Where are the problems concentrated (sector)? Operational question: Does the firm face obstacles on their performance as a result of an inadequately trained labor force? (World Bank Enterprise Surveys) Distribution (by region and dependent variable value) Región Valor variable dependiente (0-4) África Asia-Pacífico Europa Este y Asia Central América Latina y Caribe Asia-Sur Total y % vble. dependiente Total y % región Potential proxies for skill demand Development levels (per cap GDP). Skill intensity of the firm. Regional dummies. Sector dummies. Interaction terms between skill intensity and regional dummies. 2 estimation methods: ordinal logit (collapsing levels of dependent variable) and generalized ordinal logit.

8 Results La contribución for Latin America de la región al proceso de reequilibrio de la riqueza Latin American firms have greater probability to face obstacles in their performance as a result of a labour force inadequately trained (i.e., greater problems to fill their demand of skills): LAC dummy is positive and significant in all specifications, it also has the largest impact in terms of odd ratios. In Latin America, the probability for a firm to face obstacles to their performance derived from a skill deficit is greater in skill-intensive processes (interaction term LAC - skill_intens). In Latin America, machinery and motor vehicles show greater probability to face obstacles from an inadequately trained workforce.

9 Product La contribución Space de la región al proceso de reequilibrio de la riqueza Product Space: methodology based on network analysis that allows to categorize tradable sectors (SITC) along two concepts: Inter-industry similarity (proximity). Industry sophistication: per capita income associated to that industry. Source: Authors' calculations using Cytoscape

10 Product La contribución Space: de la región al proceso de reequilibrio de la riqueza Motor es relativamente vehicles modesta

11 Motor La contribución vehicles: Product de la región Space al variables proceso de reequilibrio de la riqueza Prody: Product Sophistication Index (weighted average of per capita GDP of countries that export a product with RCA; weights given by the RCAs). Other sectors Motor vehicles

12 Motor La contribución vehicles: Product de la región Space al variables proceso de reequilibrio de la riqueza Product Complexity Index (PCI): Index based on the degree of diversification of the countries that export the good, and the ubiquity of the exported product. Higher levels of the index are associated with products requiring a greater number of capabilities, or more complex. Other sectors Motor vehicles

13 Motor La contribución vehicles: Product de la región Space al variables proceso de reequilibrio de la riqueza Potential Prody: Degree of connectivity of a product to the rest of the product space. Higher levels are associated with a better location in the product space. Potential Prody Other sectors Motor vehicles

14 Training La contribución by firmsde la región al proceso de reequilibrio de la riqueza Latin America (LAC) and East Asia-Pacific (EAP) show the greatest percentage of firms with training programs for their permanent employees. Training by Firms (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% AFR EAP ECA LAC SAR no yes

15 Training La contribución by firms de in LAC: la región sector al distribution. proceso de reequilibrio de la riqueza In Latin America, the training effort is disseminated between manufacturing industries intensive in capital/technology (motor vehicles, machinery, electronics) and other, more heterogeneous sectors (construction, food). Textiles, furniture and wood show the lowest percentage of firms with training. Overall range is relatively thin (40-60%). 100% Latin America: Training by firms (%) YES NO 80% 60% 40% 20% 0% cons moto food chem basi mach fabr elec othe serv wood furn text

16 Training La contribución by firms: de other la región regions. al proceso de reequilibrio de la riqueza Europe and Central Asia replicates the same pattern seen in LAC. Low training in South Asia and Africa. East Asia-Pacific has a stronger emphasis on advanced manufacturing, showing a wider range (25-80%). East Asia: Training by firms (%) 100% 80% 60% 40% 20% YES NO 0% moto elec mach basi fabr chem othe cons food text wood serv furn

17 Perspectivas Shifting Wealth económicas and skills de América in Latin Latina America 1 Shifting Wealth and skills 2 Skill demand in Latin America 3 Final thoughts and questions

18 La Final contribución thoughts and de la questions región al proceso de reequilibrio de la riqueza The results tend to discredit the idea that the re-commoditization trend has reduced the demand for skills in the region. The alleged inability of Latin America to build the skills in certain sectors seems a significant deterrent to structural transformation. Puzzle: Latin America stands as the region with the greatest effort in training within the firm. Firms in the region are the most exposed to performance problems due to scarce or inadequate skills. Is there a problem of inefficiency of training programs in Latin America? What are the possible causes? What countries are examples of best practices in training programs? Do they offer a replicable model to Latin American countries?

19 Gracias!