Saving for Development: How Latin America and the Caribbean Can Save More and Better

352 Pages·2016·6.374 MB·English

by  Inter-American Development Bank (auth.), Eduardo Cavallo, Tomás Serebrisky (eds.)

DEVELOPMENT IN THE AMERICAS
SAVING
FOR DEVELOPMENT
How Latin America and the Caribbean Can Save More and Better
Edited by
Eduardo Cavallo
and Tomás Serebrisky
SAVING FOR
DEVELOPMENT

SAVING FOR
DEVELOPMENT
How Latin America and the Caribbean
Can Save More and Better
Edited by
Eduardo Cavallo and Tomás Serebrisky
Inter-American Development Bank
This book is distributed under the terms of the Creative Commons Attribution-
NonCommercial-NoDerivatives 3.0 IGO license (http://creativecommons.org/
licenses/by-nc-nd/3.0/igo/) and may be reproduced with attribution to the
Inter-American Development Bank (IDB) and for any non-commercial purpose. No derivative work is
allowed.
Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be sub-
mitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB’s name for any purpose
other than for attribution, and the use of IDB’s logo shall be subject to a separate written license
agreement between the IDB and the user and is not authorized as part of this CC-IGO license. Note
that the link provided above includes additional terms and conditions of the license.
The images or other third party material in this book are included in the work’s Creative Commons
license, unless indicated otherwise in the credit line; if such material is not included in the work’s Cre-
ative Commons license and the respective action is not permitted by statutory regulation, users will
need to obtain permission from the license holder to duplicate, adapt or reproduce the material.
Inter-American Development Bank
Washington, DC, USA
ISBN 978-1-349-94928-1 ISBN 978-1-349-94929-8 (eBook)
DOI 10.1057/978-1-349-94929-8
Library of Congress Control Number: 2016942088
© Inter-American Development Bank 2016. This book is published open access.
The opinions expressed in this publication are those of the authors and do not nec-
essarily reflect the views of the Inter-American Development Bank, its Board of
Directors, or the countries they represent.
Open Access This work is distributed under a Creative Commons Attribution-
NonCommercial-NoDerivatives 3.0 IGO license (http://creativecommons.org/
licenses/by-nc-nd/3.0/igo/) and may be reproduced with attribution to the Inter-
American Development Bank (IDB) and for any non-commercial purpose. No
derivative work is allowed.
Any dispute related to the use of the works of the IDB that cannot be settled ami-
cably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use
of the IDB’s name for any purpose other than for attribution, and the use of IDB’s
logo shall be subject to a separate written license agreement between the IDB and
the user and is not authorized as part of this CC-IGO license. Note that the link pro-
vided above includes additional terms and conditions of the license.
The images or other third party material in this book are included in the work’s
Creative Commons license, unless indicated otherwise in the credit line; if such
material is not included in the work’s Creative Commons license and the respec-
tive action is not permitted by statutory regulation, users will need to obtain
permission from the license holder to duplicate, adapt or reproduce the material.
This work is subject to copyright. All commercial rights are reserved by the
Inter-American Development Bank, whether the whole or part of the material is
concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way,
and transmission or information storage and retrieval, electronic adaptation, com-
puter software, or by similar or dissimilar methodology now known or hereafter
developed.
The use of general descriptive names, registered names, trademarks, service
marks, etc. in this publication does not imply, even in the absence of a specific
statement, that such names are exempt from the relevant protective laws and reg-
ulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and
information in this book are believed to be true and accurate at the date of publica-
tion. Neither the publisher nor the authors or the editors give a warranty, express
or implied, with respect to the material contained herein or for any errors or omis-
sions that may have been made.
Cover image © Dave Cutler / Illustration Source
Cover design by Dolores Subiza
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Nature America Inc. New York
Contents
List of Tables ....................................................vii
List of Figures ...................................................ix
List of Boxes .................................................... xv
Preface ....................................................... xvii
Acknowledgments ..............................................xxi
Contributors ................................................... xxv
1. Saving for a Sunny Day ........................................1
2. The State of Saving in Latin America and the Caribbean .........21
3. Financial Systems to Make Savings Count ..................... 45
4. More and Better Saving for Productive Investment ............. 75
5. Saving for Stability ......................................... 109
6. Running Out of Time: The Demographics of Saving ............131
7. Saving for the Future: Pension Systems .......................157
8. A Better Way for Government to Save ........................187
9. Saving Begins at Home ......................................217
10. Firm Productivity as an Engine of Saving .....................243
vI SAvING FOR DEvELOPMENT
11. B reaking the vicious Circle: Financial Policies
for High-Quality Saving ....................................263
References ....................................................289
Index ..........................................................321
List of Tables
Table 2.1. Saving Rates by Sector, 1980–2014
(percentage of GDP) 27
Table 4.1 Private Financing Suppliers in Infrastructure Projects,
2005–14 97
Table 4.2 Potential Additional Investments in Infrastructure
Using Flows of Pension Fund Assets under
Management (percentage of GDP) 102
Table 6.1 E lderly with Limitations Who Receive Help with
Daily Activities (Percentage) 134
Table 8.1 Energy Subsidies and Leakages, 2013
(percentage of GDP) 200
Table 8.2 Social Programs Expenditure (percentage of GDP) 202
Table 8.3 Indicators of Leakages in Social Programs
(percentage of GDP) 203
Table 8.4 Tax Expenditure in vAT on Food, Medicine and
Housing, and Associated Leakages
(percentage of GDP) 204
Table 9.1 A ge Differences between Wives and Husbands
(percent of households) 222
Table B.9.1 Median Long-Term and Present-Bias
Discount Factors 233
Table 11.1 Institutional Credit Market Indicators,
Average 2014–2016 266
Table 11.2 C overage of Bank Agents, Select Latin American
Countries and various Regions 278

List of Figures
Figure B1.1 Fundamental Accounting Relationships of Savings 8
Figure 2.1 Gross National Saving Rates (percent of GDP),
Simple Averages by Region 24
Figure 2.2 Distribution of Aggregate Saving Rates by Region 24
Figure 2.3 Gross National Saving Rates in Latin America and the
Caribbean 25
Figure 2.4 Composition of Total Saving in the Region, 1980–2014 26
Figure 2.5 Distribution of Foreign Saving Rates by Region 27
Figure 2.6 Composition of Private Saving, World and
Latin America and the Caribbean 28
Figure B2.1 Alternative Definitions of Saving Rates vs
Traditional Definition 31
Figure 2.7 Dependency Rates (Young and Old), by Region 33
Figure 2.8 H ousehold Saving Rates by Age Group in
Latin America and the Caribbean 35
Figure 2.9 Household Saving Rates by Income Deciles 36
Figure 2.10 Use of Savings among Households at the Base
of the Pyramid 39
Figure 3.1 F inancial System Deposits and Assets under
Management of Different Institutional Investors 47
Figure 3.2 Median Banking System, OECD and
Latin American and Caribbean Countries 50
Figure 3.3 Financial Inclusion by Region 52
Figure 3.4 T ypes of Financial Institutions: Number and
Share of Savings as Percentage of GDP 53
Figure B3.1 Allocation of New Savings: Real Estate vs. Banks 55