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Jorge Alvarez, Mr. Marco Arena, Alain Brousseau, Mr. Hamid Faruqee, Emilio William Fernandez Corugedo, Mr. Jaime Guajardo, Gerardo Peraza, and Juan Yepez
As a new migration crisis is unfolding in Europe because of the war in Ukraine, the purpose of this paper is to also highlight the ongoing migration crisis in Latin America and the Caribbean (LAC) due to Venezuela’s economic collapse. The stock of Venezuelan migrants reached 5 million in 2019, most of which had settled in other LAC countries. Following a temporary halt during the pandemic, migration from Venezuela has resumed, with the stock of migrants reaching 6.1 million in 2021. These migration flows are expected to continue in the coming years, which can strain public services and labor markets in the recipient economies in LAC. This Departmental Paper focuses on migration spillovers from the Venezuelan economic and social crisis. It sheds light on how migration can raise GDP growth and affect fiscal and external positions in host countries. It also discusses policy options, including greater support for education and integration into the workforce, which could help migrants find jobs to match their skills and help raise growth prospects in recipient countries.
International Monetary Fund. Independent Evaluation Office
The IEO evaluation contains a wealth of analysis and background material that will be invaluable as staff embarks on the preparation of the 2023 CD Strategy Review. The overall assessment is very positive, highlighting the achievements authorities have made with the help of Fund CD and the value they continue to place on this area of Fund work. The report also acknowledges the significant strides that have been made in improving governance and management of CD in recent years.
Mr. Antonio David, Mr. Fabiano Rodrigues Rodrigues Bastos, and Marshall Mills
This paper identifies the factors linked to cross-country differentials in growth performance in the aftermath of social conflict for 30 sub-Saharan African countries using panel data techniques. Our results show that changes in the terms of trade are the most important correlate of economic performance in post-conflict environments. This variable is typically associated with an increase in the marginal probability of positive economic performance by about 30 percent. Institutional quality emerges as the second most important factor. Foreign aid is shown to have very limited ability to explain differentials in growth performance, and other policy variables such as trade openness are not found to have a statistically significant effect. The results suggest that exogenous factors ("luck") are an important factor in post-conflict recovery. They also highlight the importance in post-conflict settings of policies to mitigate the macroeconomic impact of terms of trade volatility (including countercyclical macroeconomic policies and innovative financing instruments) and of policies to promote export diversification.
International Monetary Fund. Research Dept.

There has been a vast literature of cross-country studies of economic growth, but the mechanics of growth and development are still not fully understood. The lack of an explicit theory identifying growth determinants has recently prompted researchers to start investigating how robust the various possible empirical relations are by formally incorporating model uncertainty in the empirical growth analysis. This article surveys the latest research related to investigating growth empirics using robustness analysis.

Ms. Mwanza Nkusu
This paper demonstrates that the Dutch disease need not materialize in low-income countries that can draw on their idle productive capacity to satisfy the aid-induced increased demand. Diagnoses on, and prognoses for, the Dutch disease should take into account country-specific circumstances to avoid ill-advised policies. The paper emphasizes that using public resources inefficiently can be more painful than real exchange rate appreciations, which may not necessarily embody the Dutch disease.
International Monetary Fund. Research Dept.

This paper empirically investigates the monetary impact of banking crises in Chile, Colombia, Denmark, Japan, Kenya, Malaysia, and Uruguay during 1975–98. Cointegration analysis and error correction modeling are used to research two issues: (i) whether money demand stability is threatened by banking crises; and (ii) whether crises lead to structural breaks in the relation between monetary indicators and prices. Overall, no systematic evidence that banking crises cause money demand instability is found. The paper also analyzes inflation targeting in the context of the IMF-supported adjustment programs.

Mr. James Morsink and Mr. Markus Haacker
The information technology (IT) revolution has arrived, but how much will it change the world? It has been established that IT is contributing to labor productivity growth through both increases in the levels of IT capital per worker and total factor productivity (TFP) growth in the production of IT equipment. The main outstanding issue is whether IT is contributing to TFP growth more generally. Using data on IT expenditure and production for a broad sample of countries, we find a positive, large, and significant effect of IT expenditure on the acceleration in TFP in the late 1990s and a smaller-and significant-effect of IT production. We also find evidence that the impact of IT expenditure on TFP growth increases over time, suggesting that spillovers materialize gradually. Our results suggest that the increase in IT expenditure across industrial countries during 1995-2000 will eventually lead to an average increase in TFP growth of about one-third of 1 percent per year.
Mr. Alberto Chong and Ms. Luisa Zanforlin
This paper extends Grossman and Helpman’s seminal work (1991), and presents an endogenous growth model where innovations created in a high-tech sector may be assimilated or adapted by a low-tech sector. Applying a simple Heckscher-Ohlin framework, the effects of technological diffusion are found to allow a country relatively scarce in human capital to benefit from nondecreasing rates of growth through its low-tech sector. The model is tested by using a dynamic panel data approach (Arellano and Bover, 1995). Results are consistent with the predictions of the model and robust to a broad range of definitions of technological intensity.