Op-Eds on Trade and R&D Policies

Guatemala ain't Australia

Plaza Pública. October 2018. Australia's path to development involved the agricultural and mining sector. Why is it that this is not the development path for Guatemala?

Neither Starbucks nor Dunkin' Donuts

Plaza Pública. September 2018. The ability of the Guatemalan coffee sector to promote to economic development cannot be tied to the big coffee shop chains. The challenges are not to obtain higher prices for the same goods. It is to increase the labor productivity via automation and R&D investment to promote the production of coffee byproducts.

P.S. On coffee and public funds

Plaza Pública. September 2018. What if instead of giving public funds to the coffee and bank sector, we promote a bankruptcy law to improve the allocation of those resources?

The coffee in Guatemala is not facing an emergency

Plaza Pública. August 2018. Our economy has been suffering since 1897 every time coffee prices drop. We need to start considering long-term solutions rather than short-term relief.

Vice President Pence, look to Hamilton, not to Jefferson

Plaza Pública. July 2nd 2018. Vice President Pence recently visited Guatemala. If he wants to stop illegal immigration to the U.S. he should acknowledge that the U.S. policy is not helping. Furthermore, it only means wasting U.S. tax dollars.

What does Guatemala have a comparative advantage in?

Plaza Pública. April 2018. It appears Guatemala has a comparative advantage in certain agricultural and mining goods. However we need to be cautious: comparative advantages do not explain all trade behavior and consequently should not be used as the only way to generate economic policy in Guatemala, especially if it is understood as is usually taught in Guatemala, as it was done 200 years ago.

Trade war or master stroke?

Plaza Pública. March 24, 2018. I discuss three scenarios to understand the trade dispute that is taking place between the U.S. and China.

Reforming the export processing zones

Plaza Pública. February 27th, 2018. Guatemalan Congressmen need to assess the need to reform the free-trade zona legislation to include more economic sectors. But, while doing so, it should also improve the mechanisms to evaluate the policy and to enforce legislation among firms receiving the benefits.

VAT, Exchange Rate and Minimum Wage (IVA, Tipo de Cambio y Salario Mínimo)

Plaza Pública. February 12, 2018. We are running around in circles in Guatemala: economic obstacles to growth that were a concern back in 2003 are still a concern today: VAT devolution to exporters, unfavorable exchange rate, and high minimum wages.

Coffee beyond Coffee (Café más allá del café)

Plaza Pública. December 02, 2017. On the need to promote government sponsored research, development, and commercialization in Guatemala to export more valuable agricultural byproducts. Article focuses on coffee.

Instructions for climbing a staircase (Instrucciones para subir la escalera)

Plaza Pública. July 31, 2017. Development is like climbing three different ladders at the same time: the quality ladder; the product sophistication ladder; and the vertical integration ladder. The title makes reference to Julio Cortazar famous short story.

The unavoidable need to achieve structural change (La inexcusable necesidad de cambio estructural)

Plaza Pública. July 17, 2017. To develop, Guatemala and similar countries still need to support structural change: to move workers out of agriculture and informal retail into high productivity jobs. However, some analysts still insist in promoting agricultural jobs. This is a brief rebuttal.

Cooking development (Cocinando el desarrollo)

Plaza Pública. July 03, 2017. Policy-makers should be wary of taking a "binding constraints" approach. Development is like a cooking recipe: you need several ingredients together. Consequently, the relevance to think in terms of "policy packages" vs "sole policies".

Ludwig Von MIses: export manufacturing promoter (Von Mises, el industrialista exportador)

Plaza Pública. May 22, 2017. Ludwig von Mises, an economist belonging to the Austrian School of Economics, and an inspiration for many libertarians, went to Mexico in 1943. His recommendation was that the Mexican government should promote export manufacturing, recognizing that government intervention was justified in the presence of a high proportion of workers in the agricultural sector.

Export Prices (Precios de Exportación)

Plaza Pública. May 08, 2017. Attention to export product prices trends might boost economic growth. Could Guatemala start selling women´s full length hosiery which has shown a positive price increases? What is needed to promote a shift towards this and other products?

Trade partners (Socios comerciales)

Plaza Pública. April 10, 2017. Guatemala and other Central American countries have a pending trade policy challenge: to minimize their reliance on a few trade partners to minimize trade shocks.

Soccer and economic policies (Futbol y políticas económicas)

Plaza Pública. March 13, 2017. Like in soccer, we need to run to where the ball will be not to where the ball currently is. If we apply this advice to economic policy it means we should look beyond where we currently are, an economy dominated by agricultural jobs and small firms, and start to move our policies to where we want to be.

Incentives to economic sectors (Incentivos a sectores económicos)

Plaza Pública. November 21, 2016. Export diversification is key to achieve economic development. Nonetheless, to start exporting more sophisticated products may need government support to overcome many hurdles existing in developing nations.

It´s not about promoting entrepreneurship (No es la empresarialidad)

Plaza Pública. September 12, 2016. Developing countries like Guatemala have a high proportion of entrepreneurs while it has a small proportion of workers in big firms. In this situation, the latter provides higher income levels and the benefits of a formal job. Hence, the need to support the growth of firms rather than to support small firms with limited growth potential.

Guatemala vs Panama (Guatemala versus Panamá)

Plaza Pública. August 29th, 2016. Both countries are receiving massive injections of foreign resources. Guatemala as remittances. Panama as foreign direct investment (FDI). The impact is clearly different with Panama´s growth picking up because they´re leveraging those resources to promote infrastructure and new businesses.

Plan of the Alliance for Prosperity in the Northern Triangle (El Plan de la Prosperidad)

Plaza Pública. May 09th, 2016. Is the Plan of the Alliance for Prosperity in the Northern Triangle, involving the United States, El Salvador, Guatemala, and Honduras, design to promote development or will it continue promoting illegal immigration? It appears its current design favors illegal immigration.

Tourism is not a viable development strategy for Guatemala (¿Turismo? Tampoco exageremos)

Plaza Pública. February 29th, 2016. It is a fantasy to believe that tourism will be a development strategy for Guatemala.