Enhancing Social Capital in Latin America

Since its formation, the Latin America Research Center (LARC) has worked to enhance intellectual capital creation by working with academics as well as business leaders in the region.

Programs in this area, supported by the LARC include:

The Global Colloquium on Participant-Centered Learning (GloColl), is an HBS course for faculty at business schools in emerging economies who are trained in interactive methods of teaching and learning.

The Social Enterprise Knowledge Network (SEKN), a consortium of eleven business schools that research and develop teaching cases on social enterprise in leading Latin American business schools.

Executive Education
in Latin America

Latin America

Archives

El Mundo del Fiado. Crédito, Comerciantes y Productores Rurales. 1897-1930

Lluch, Andrea M.
August 2006

Anuario IEHS 20, no. 20 (2006)

Bankers, Industrialists, and their Cliques: Elite Networks in Mexico and Brazil During Early Industrialization (pdf)

Musacchio, Aldo, and Ian Read
May 2006

Enterprise & Society (forthcoming)

Natural Resources, Institutions, and Civil War: Lessons from Mexico

Maurer, Noel
April 2006

A growing literature in economics and political science argues that natural-resource-abundant countries are more likely to be governed by corrupt governments and experience political instability. The experience of Mexico during 1880-1930 casts doubt on this hypothesis. Mexico's mining industry grew rapidly under a very corrupt dictatorship. When that dictatorship fell and the polity lapsed into civil war, the mining industry was barely affected. The Mexican case suggests that extractive industries may be remarkably insensitive to changes in economic institutions or political instability. Causality may run from corrupt government or civil disorder to an economy relatively dependent on natural resource extraction, rather than the other way around.

Harvard Business School Working Paper No. 06-044, 2006

Related Lending and Economic Performance: Evidence from Mexico, 1888-1913 (pdf)

Maurer, Noel
April 2006

There is a consensus among academics and policy makers that related lending, a widespread practice in most LDCs, should be discouraged because it provides a mechanism through which bankers can loot their own banks at the expense of minority shareholders and depositors. We argue that neither looting nor credit misallocation are necessary outcomes of related lending. On the contrary, related lending often exists as a response by bankers to high information and contract enforcement costs. Whether it encourages looting crucially depends on the other institutions that support the banking system, particularly those give depositors and outside shareholders incentives and mechanisms to monitor directors, and that give directors incentives to monitor one another. We operationalize this argument by examining an LDC banking system in which there was widespread related -- Mexico from 1888 to 1913. We find little evidence, during this 25 year period, of tunneling or credit misallocation-even in the midst of a major, externally caused financial crisis that occasioned a government-organized rescue. The banking system was, in fact, remarkably stable and manufacturing enterprises that received related loans performed at least as well as their competitors.

Harvard Business School Working Paper No. 06-045, 2006

Was NAFTA Necessary? Trade Policy and Relative Economic Failure since 1982 (pdf)

Maurer, Noel
April 2006

Mexico signed NAFTA in 1994. NAFTA's primary importance was not in providing market access to the United States. Rather, its primary importance was in providing investor protections to foreign direct investment. NAFTA succeeded in its instrumental goal of increasing foreign direct investment. Increased FDI, however, was limited mostly to manufacturing and has had relatively little impact on the bulk of the economy. Without reforms in the finance and energy sectors, and greater security of property rights for domestic investors, Mexico will be doomed to continuing subpar economic performance.

Harvard Business School Working Paper No. 06-043, 2006

What Roosevelt Took: The Economic Impact of the Panama Canal, 1903-29 (pdf)

Maurer, Noel
April 2006

The Panama Canal was one of the largest public investments of its time. In the first decade of its operation, the Canal produced significant social returns for the United States. Most of these returns were due to the transportation of petroleum from California to the East Coast. Few of these returns, however, accrued to the Panamanian population or government. U.S. policy deliberately operated to minimize the effects of the Canal on the Panamanian economy. The major exception to this policy was the American anti-malarial campaign, which improved health conditions in the port cities.

Harvard Business School Working Paper No. 06-041, 2006

'Plata o Plomo': Bribe and Punishment in a Theory of Political Influence (pdf)

Dal Bó, Ernesto, Pedro Dal Bó, and Rafael Di Tella
February 2006

We present a model where groups attempt to exert influence on policies using both bribes (plata, Spanish for silver) and the threat of punishment (plomo, Spanish for lead). We then use it to make predictions about the quality of a country's public officials and to understand the role of institutions granting politicians with immunity from legal prosecution. The use of punishment lowers the returns from public office and reduces the incentives of high ability citizens to enter public like. Cheaper plomo and more resources subject to official discretion are associated with more frequent corruption and less able politicians. Moreover, the possibility of punishment changes the nature of the influence game, so that even cheaper plata can lower the ability of public officials. Protecting officials from accusations of corruption (immunity) will decrease the frequency of corruption and may increase the quality of politicians if the judiciary is weak. These predictions are the opposite to those emerging from a model where only bribes are used.

American Political Science Review 100, no.1 (February 2006): 41-53