Crisis in Latin America : Infrastructure Investment, Employment and the Expectations of Stimulus

Infrastructure investment is a central part of the stimulus plans of the Latin American and the Caribbean (LAC) region as it confronts the growing financial crisis. This paper estimates the potential effects on direct, indirect, and induced employment for different types of infrastructure projects with LAC-specific variables. The analysis finds that the direct and indirect short-term employment generation potential of infrastructure capital investment projects may be considerable - averaging around 40,000 annual jobs per US$1billion in LAC, depending upon such variables as the mix of subsectors in the investment program; the technologies deployed; local wages for skilled and unskilled labor; and the degrees of leakages to imported inputs. While these numbers do not account for substitution effect, they are built around an assumed "basket" of investments that crosses infrastructure sectors most of which are not employment-maximizing. Albeit limited in scope, rural road maintenance projects may employ 200,000 to 500,000 annualized direct jobs for every US$1billion spent. The paper also describes the potential risks to effective infrastructure investment in an environment of crisis including sorting and planning contradictions, delayed implementation and impact, affordability, and corruption.

Bibliographic Details

Main Authors:	Schwartz, Jordan Z., Andres, Luis A., Dragoiu, Georgeta
Language:	English
Published:	2009-07-01
Subjects:	ACCOUNTABILITY, AIRPORTS, ASSET VALUE, ASSET VALUES, AVERAGE WAGES, BAILOUT, BAILOUTS, BALANCED BUDGET, BANK POLICY, BEHAVIORAL ECONOMICS, BEST PRACTICES, BIDS, BORROWING, CALCULATION, CALCULATIONS, CAPITAL EXPENDITURE, CAPITAL EXPENDITURES, CAPITAL GOODS, CAPITAL INVESTMENT, CAPITAL INVESTMENTS, CAPITAL STOCKS, CARBON EMISSIONS, CASH TRANSFER, CASH TRANSFERS, COMMERCIAL BANKS, COMMODITY, COMMODITY PRICES, COMPETITIVE BIDDING, CONSUMER, CONSUMER EXPENDITURES, CONSUMER GOODS, CONSUMERS, CONTRIBUTION, CONTRIBUTIONS, COST OF CAPITAL, CREDITS, CURRENT EXPENDITURES, DEBT, DEBT FINANCING, DEFICITS, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DISBURSEMENT, DISBURSEMENTS, DRAINAGE, DRIVING, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ELASTICITY, EMISSIONS, ENVIRONMENTAL IMPACTS, FEDERAL RESERVE, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL FLOWS, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL POSITION, FINANCIAL SECTOR, FINANCIAL SECTORS, FISCAL CONDITIONS, FISCAL POLICIES, FISCAL POLICY, FISCAL SUSTAINABILITY, GENERAL POPULATION, GLOBAL ECONOMY, GOVERNMENT DEBT, GOVERNMENT GUARANTEES, GOVERNMENT INVESTMENT, GOVERNMENT REVENUE, GOVERNMENT SPENDING, GROSS DOMESTIC PRODUCT, HIGHWAY, HIGHWAY ADMINISTRATION, HIGHWAY CONSTRUCTION, HIGHWAY PROJECTS, HUMAN DEVELOPMENT, INCOME, INFLATION, INFRASTRUCTURE DEVELOPMENT, INFRASTRUCTURE FINANCE, INFRASTRUCTURE INVESTMENT, INFRASTRUCTURE INVESTMENTS, INFRASTRUCTURE PROJECTS, INFRASTRUCTURE REHABILITATION, INSURERS, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL FINANCE, INVESTMENT DECISION, INVESTMENT PROGRAM, INVESTMENT PROGRAMS, INVESTMENT PROJECTS, INVESTMENTS IN HIGHWAYS, JOB CREATION, JOB LOSS, LABOR COSTS, LABOR MARKET, LEGISLATION, LIGHT RAIL, LIQUIDITY, MACROECONOMICS, MARKET DEVELOPMENT, MARKET EFFICIENCY, MICROENTERPRISES, MINIMUM WAGE, MINIMUM WAGES, MODES OF TRANSPORT, MONETARY POLICY, MORTGAGE, MORTGAGE HOLDERS, OPERATING COSTS, OPPORTUNITY COST, ORIGINAL INVESTMENT, PENSION, POLITICAL ECONOMY, POVERTY ALLEVIATION, PRIVATE CAPITAL, PRIVATE FINANCING, PRIVATE HOUSING, PROBABILITIES, PRODUCTIVITY, PUBLIC EXPENDITURE, PUBLIC EXPENDITURES, PUBLIC HOUSING, PUBLIC INVESTMENT, PUBLIC INVESTMENTS, PUBLIC SERVICES, PUBLIC SPENDING, PUBLIC WORKS, RAIL, RECESSION, RECESSIONS, REINVESTMENT, RESERVES, RETURN, ROAD, ROAD INFRASTRUCTURE, ROAD INVESTMENT, ROAD MAINTENANCE, ROAD MANAGEMENT, ROADS, ROUTES, RURAL INFRASTRUCTURE, RURAL ROADS, SAFETY, SAFETY NET, SALARY, SALES, SANITATION, SENIOR, SHORT-TERM GOALS, SMART TRANSPORTATION, SOLVENCY, STOCK MARKET, STOCK MARKETS, STOCKS, STREETS, SUM OF MONEY, TAX, TAX CREDITS, TAX REFORM, TELECOMMUNICATIONS, TRANSPORT, TRANSPORT EQUIPMENT, TRANSPORT POLICY, TRANSPORT POLICY INSTITUTE, TRANSPORT SECTOR, TRANSPORTATION, TRANSPORTATION POLICY, TRANSPORTATION SPENDING, TRUE, TYPE OF INVESTMENT, UNEMPLOYED, UNEMPLOYMENT, UNSKILLED WORKERS, URBAN ROADS, URBAN SERVICES, WAGE, WAGES, WATER SUPPLY, WORTH,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090721084348 https://hdl.handle.net/10986/4201
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