{"title":"The role of the commodity price boom in shaping public social spending: Evidence from Latin America","authors":"Svenja Flechtner , Martin Middelanis","doi":"10.1016/j.worlddev.2024.106717","DOIUrl":null,"url":null,"abstract":"<div><p>We study the potential impact of the commodity price boom of 2003 to 2013 on public social spending in Latin America. We estimate structural vector autoregressions and local projections for 16 Latin American countries over the period from 1990 to 2019 and investigate if we can attribute increases in public spending on health, education, and social protection to increases in a country’s net commodity terms-of-trade. By focusing on the impulse responses derived from country-specific estimations, we find a huge variety in response patterns. Our study finds that two countries experienced lasting increases in public social spending due to the commodity boom (Argentina, Ecuador). Some others observed at least temporary increases of few years (Brazil, Mexico), reacted first with declines and then rises (Chile), and yet others did not respond at all (Bolivia, Colombia, Peru). As expected, we cannot relate public social spending with commodity prices in countries without commodity price boom. Among countries with positive responses, there is no clear tendency concerning the function of spending that benefits most. We discuss potential explanations behind the heterogeneity of our country-wise results and conclude that the presence of left-wing governments, fiscal rules, natural resource funds and economic diversification provide plausible explanations for single country cases, but no general patterns emerge. We conclude that the commodity price boom was neither necessary nor sufficient for social policy expansion in Latin America, and factors explaining its effects differ from country to country. Our study highlights the importance of in-depth examinations of country-specific factors and the need of (currently lacking) high-quality time series data in development research.</p></div>","PeriodicalId":48463,"journal":{"name":"World Development","volume":"182 ","pages":"Article 106717"},"PeriodicalIF":5.4000,"publicationDate":"2024-07-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0305750X24001876/pdfft?md5=4417493706a6d6fa6b9c836f947101d9&pid=1-s2.0-S0305750X24001876-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"World Development","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0305750X24001876","RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"DEVELOPMENT STUDIES","Score":null,"Total":0}
引用次数: 0
Abstract
We study the potential impact of the commodity price boom of 2003 to 2013 on public social spending in Latin America. We estimate structural vector autoregressions and local projections for 16 Latin American countries over the period from 1990 to 2019 and investigate if we can attribute increases in public spending on health, education, and social protection to increases in a country’s net commodity terms-of-trade. By focusing on the impulse responses derived from country-specific estimations, we find a huge variety in response patterns. Our study finds that two countries experienced lasting increases in public social spending due to the commodity boom (Argentina, Ecuador). Some others observed at least temporary increases of few years (Brazil, Mexico), reacted first with declines and then rises (Chile), and yet others did not respond at all (Bolivia, Colombia, Peru). As expected, we cannot relate public social spending with commodity prices in countries without commodity price boom. Among countries with positive responses, there is no clear tendency concerning the function of spending that benefits most. We discuss potential explanations behind the heterogeneity of our country-wise results and conclude that the presence of left-wing governments, fiscal rules, natural resource funds and economic diversification provide plausible explanations for single country cases, but no general patterns emerge. We conclude that the commodity price boom was neither necessary nor sufficient for social policy expansion in Latin America, and factors explaining its effects differ from country to country. Our study highlights the importance of in-depth examinations of country-specific factors and the need of (currently lacking) high-quality time series data in development research.
期刊介绍:
World Development is a multi-disciplinary monthly journal of development studies. It seeks to explore ways of improving standards of living, and the human condition generally, by examining potential solutions to problems such as: poverty, unemployment, malnutrition, disease, lack of shelter, environmental degradation, inadequate scientific and technological resources, trade and payments imbalances, international debt, gender and ethnic discrimination, militarism and civil conflict, and lack of popular participation in economic and political life. Contributions offer constructive ideas and analysis, and highlight the lessons to be learned from the experiences of different nations, societies, and economies.