2015年-IMF国际货币组织全球_El_Salvador_Selected_Issues_22页_1mb

Summary of Selected Issues Paper on El Salvador (January 2015)

Core Content

This paper analyzes El Salvador's economic performance, focusing on potential output, export diversification, and investment drivers. It highlights structural challenges and provides policy recommendations for sustainable growth.

Potential Output Assessment

• Potential Growth and Output Gap:
  El Salvador's potential growth is estimated at 2 percent for 1999–2015, significantly lower than the Central American region's average of 4 percent. The output gap is now nearly closed.

  • Potential growth declined after the global financial crisis (GFC) due to reduced capital accumulation and weak total factor productivity (TFP).
  • For 2014, potential growth was estimated at 1.7 percent.
  • The output gap is calculated as the difference between actual and potential output, based on equilibrium employment and capacity utilization.

• TFP and Structural Factors:
  TFP growth has been weakening, primarily due to low R&D investment, weak property rights protection, and a poor business environment.

  • TFP is defined as the residual in the production function, capturing the efficiency of combining labor and capital.
  • Factors affecting TFP include administrative burdens, corruption, lack of judicial stability, poor infrastructure, and limited access to finance.
  • Enhancing human capital and attracting skilled returnees can help improve TFP.

• Methodology:
  Potential growth and NAIRU are estimated using a multivariate Kalman filter and Bayesian approach.

  • The model incorporates empirical relationships between GDP, unemployment, and inflation.
  • The prior assumption is that supply shocks are the main driver of GDP fluctuations.
  • The steady-state unemployment rate is estimated at 5.3 percent, and potential GDP growth at 2 percent.

• Challenges in Estimation:
  There are data limitations and statistical shortcomings, such as endpoint bias and difficulty in identifying the detrending parameter.

  • TFP estimates are sensitive to measurement errors in labor and capital series.

Fostering Diversification and Integration

• Export Diversification:
  El Salvador has limited export diversity, relying heavily on textiles, food, and knowledge-intensive products.

  • Textiles have a rising comparative advantage up to the mid-2000s but have since stagnated.
  • Food's comparative advantage has declined since the early 2000s.
  • Knowledge-intensive products have a small share in exports, and export markets are concentrated in the U.S. and CAPDR.

• Structural Transformation:
  Diversification of exports and domestic production is associated with higher economic growth and lower output volatility.

  • The paper suggests that improving logistics, diversifying trade partners, and integrating into global production chains could boost growth.
  • Enhancing the technological sophistication of exports to match Latin American countries could increase growth by up to 1.5 percentage points annually.

• Quality Upgrading:
  Quality upgrading of existing products is a viable path for diversification, especially in manufacturing, textiles, and chemicals.

  • This approach builds on existing comparative advantages and can enhance export revenue potential.
  • Limited economies of scale and small economic size make entering new markets costly, hence the importance of quality improvement.

Investment Drivers in Central America

• Low Investment Rates:
  Domestic investment in El Salvador was low, averaging 2.4 percent of GDP for public and 11.7 percent for private in 2008–2013, compared to 22.7 percent in CAPDR.

  • Foreign direct investment (FDI) was also low, averaging 1.8 percent of GDP, below the regional average of 4.8 percent.

• Growth Diagnostic:

  • Crime: Nearly 11 percent of GDP is lost or foregone due to crime, double that of Costa Rica.
  • Productivity: Low productivity in tradables is a key constraint for private investment.
  • Policy Uncertainty: High levels of policy uncertainty, measured by the volatility of the primary balance, hinder investment.
  • Political Uncertainty: Frequent elections and lack of political stability are also factors.

• Regression Analysis:
  A panel regression model is used to examine investment drivers, including export complexity, education levels, inflation, debt, and competitiveness.

  • The model includes interaction terms between openness and complexity, and debt and complexity.
  • The results indicate that export complexity, education, and policy stability have significant positive effects on investment.

Policy Recommendations

• Strengthening Capital and TFP:

  • Implement structural reforms to enhance capital accumulation and TFP.
  • Focus on mobilizing domestic savings, improving R&D, and fostering technological diffusion.
  • Enhance competition in product and labor markets and reduce administrative burdens.

• Improving the Business Environment:

  • Promote legal and judicial stability, reduce corruption, and improve infrastructure.
  • Facilitate access to financing and support innovation.

• Diversification and Integration:

  • Encourage export diversification and integration into global production chains.
  • Improve the quality of existing exports through better production techniques and human capital development.

• Addressing Labor Market Rigidities:

  • Reduce informality and improve alignment of wages with productivity.
  • Enhance labor market efficiency and competitiveness.

Key Figures and Tables

• Figure 1: Investment, Competitiveness, and Human Capital

  • Shows low investment rates, weak competitiveness, and limited human capital.

• Figure 2: Potential Output and Output Gap (1999–2014)

  • Highlights the narrowing output gap and declining potential growth.

• Table 1: Potential Output Growth and Output Gap Estimates

  • Compares growth rates and output gaps using different methodologies.

References

• Benes, J., Clinton, K., Garcia-Saltos, R., Johnson, M., Laxton, D., Machev, P., and Matheson, T., 2010.
• Cerra, V. and S. Chaman Saxena, 2000.
• Hamilton, J., 1989, 1990, 1991, 1993, 1994.
• Johnson, C., 2013.
• Konuki, T., 2008.
• Medina Cas, S., Swiston, A., and Barrot, L., 2012.
• Papageorgiou, C., and Spatafora, N., 2012.
• Henn, C., Papageorgiou, C., and Spatafora, N., 2013.