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2. Understanding Latin America's Financial Inclusion Gap
- Author:
- Liliana Rojas-Suarez and Maria Alejandra Amado
- Publication Date:
- 05-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper analyzes Latin America's Financial Inclusion Gap, the difference between the average financial inclusion for Latin America and the corresponding average for a set of comparator countries. At the country level, we assess four types of obstacles to financial inclusion: macroeconomic weaknesses, income inequality, institutional deficiencies and financial sector inefficiencies. A key finding of this paper is that although the four types of obstacles explain the absolute level of financial inclusion, institutional deficiencies and income inequality are the most important obstacles behind the Latin America's financial inclusion gap. From our analysis at the individual level, we find that there is a Latin America-specific effect of education and income. The results suggest that the effect of attaining secondary education on the probability of being financially included is significantly higher in Latin America than in its comparators. Furthermore, the difference in the probability of being financially included between the richest and the poorest individuals is significantly higher in Latin America than in comparator countries.
- Topic:
- Economics, Education, Human Rights, and Poverty
- Political Geography:
- Latin America
3. Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War
- Author:
- Juan Camilo Castillo, Daniel Mejia, and Pascual Restrepo
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- Using the case of the cocaine trade in Mexico as a relevant and salient example, this paper shows that scarcity leads to violence in markets without third party enforcement. We construct a model in which supply shortages increase total revenue when demand is inelastic. If property rights over revenues are not well defined because of the lack of reliable third party enforcement, the incentives to prey on others and avoid predation by exercising violence increase with scarcity, thus increasing violence. We test our model and the proposed channel using data for the cocaine trade in Mexico. We found that exogenous supply shocks originated in changes in the amount of cocaine seized in Colombia (Mexico's main cocaine supplier) create scarcity and increase drug-related violence in Mexico.
- Topic:
- Crime, Economics, War on Drugs, Narcotics Trafficking, and Law Enforcement
- Political Geography:
- Colombia, Latin America, and Mexico
4. From Maize to Haze: Agricultural Shocks and the Growth of the Mexican Drug Sector
- Author:
- Oeindrila Dube, Omar Garcia-Ponce, and Kevin Thom
- Publication Date:
- 02-2014
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- We examine how commodity price shocks experienced by rural producers affect the drug trade in Mexico. Our analysis exploits exogenous movements in the Mexican maize price stemming from weather conditions in U.S. maize-growing regions, as well as export flows of other major maize producers. Using data on over 2,200 municipios spanning 1990-2010, we show that lower prices differentially increased the cultivation of both marijuana and opium poppies in municipios more climatically suited to growing maize. This increase was accompanied by differentially lower rural wages, suggesting that households planted more drug crops in response to the decreased income generating potential of maize farming.
- Topic:
- Agriculture, Economics, Poverty, War on Drugs, and Narcotics Trafficking
- Political Geography:
- Latin America and Mexico