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Better spending for better lives
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Better Spending for
Better Lives:

How Latin America and the Caribbean Can Do More with Less

Edited by

  • Alejandro Izquierdo
  • Carola Pessino
  • Guillermo Vuletin

 

Highlights
  • Analysis of government spending in Latin America and the Caribbean reveals widespread waste and inefficiencies that could be as large as 4.4 percent of the region’s GDP, showing there is ample room to improve basic services without necessarily spending more resources. 
  • The publication argues against across-the-board cuts. It looks at whether countries spend too much or too little on different priorities, whether they invest enough to ensure a better future, and whether those expenditures make inequality better or worse.  
  • Along with the diagnosis, the report offers several policy recommendations on how to improve the efficiency of government spending. 

Public Spending and Fiscal Sustainability: How Can Governments Do More with Less?

 

 

(video in Spanish)

How do we meet greater social demands while strengthening fiscal sustainability? Alejandro Izquierdo and Carola Pessino, lead authors of a new IDB study, explain why fiscal efficiency and smart spending, not spending cuts across the board will pave the way to greater prosperity in Latin America and the Caribbean.

Select a Topic

Public Spending

I
Chapter 1: Has the increase in public spending come at the expense of fiscal sustainability? The answer is resounding yes.

Spending and the Cycle

II
Chapter 2: Latin American countries, tend to reduce capital expenditure in bad times and increase current expenditure in good times

The (In)Efficiency of Public Spending

III
Chapter 3: “All levels of government will have to learn to spend more wisely” 

The Impact of Public Spending on Equity

IV
Chapter 4: “More spending does not necessarily lead to better outcomes for the poor”

Public Infrastructure

Public Infrastructure: Less Waste for Better Building
Chapter 5: This chapter has provided efficiency gains estimates in public investment that taken together add up to more than 1 percent of GDP.

Making Spending Count in Education

VI
Chapter 6: The most successful school systems show that improving the efficiency and equity of public spending go hand in hand.

Smart Spending on Citizen Security

VII
Chapter 7. Greater political traction is needed for preventive interventions based on scientific evidence. 

Efficient Spending for Healthier Lives

VIII
Chapter 8: Latin American and Caribbean countries vary widely in terms of spending efficiency.

Better Institutions

IX
Chapter 9: “Improving spending efficiency requires hard work to build capacity within government and outside consensus and coordination”

Shortchanging the Future

X
Citizens in the region who lack trust in government are significantly less likely to support higher taxes for redistribution.

The most successful school systems show that improving the efficiency and equity of public spending go hand in hand. A strong public investment, increased transparency and investing mainly in teachers seem to be the keys to success.

Even if governments need to spend less in aggregate, the same or even more services could be provided if ways are found to be smarter about spending, to be more efficient, to make every penny count.

Latin American and Caribbean countries vary widely in terms of spending efficiency. Chile is the only Latin American country among the top 25 percent of performers

Cuando gastar más no es suficiente: 10 ideas para un gasto público inteligente en seguridad ciudadana
Cuando gastar más no es suficiente: 10 ideas para un gasto público inteligente en seguridad ciudadana

Sin Miedos - Rodrigo Serrano-Berthet

El alto costo de la diabetes
El alto costo de la diabetes

Gente Saludable - Diana Pinto

 Greater Efficiency and the Path to a Prosperous Future for Latin America and the Caribbean
Greater Efficiency and the Path to a Prosperous Future for Latin America and the Caribbean

Ideas Matter - Alejandro Izquierdo

Queridos gestores de la salud, gastar más no es suficiente
Queridos gestores de la salud, gastar más no es suficiente

Gente Saludable - Gianluca Cafagna

How Latin America Can Be Smarter on Crime
How Latin America Can Be Smarter on Crime

Ideas Matter - Rodrigo Serrano-Berthet | Steven Ambrus

Ideas Matter - Gregory Elacqua and Matías Martínez
To Boost Education, Latin America Needs to Spend More Efficiently

Ideas Matter - Gregory Elacqua and Matías Martínez

Ideas Matter - Diana Pinto and Gianluca Cafagna
Tackling Soaring Drug Prices in Latin America and the Caribbean

Ideas Matter - Diana Pinto and Gianluca Cafagna

Ideas Matter - Steven Ambrus
Boosting Efficiency En Route to Universal Health Coverage

Ideas Matter - Steven Ambrus

How does trust impact your quality of life?
How does trust impact your quality of life?

Improving lives

Better Spending, Better Lives
Better Spending, Better Lives

Improving lives

Events
May 07 2019
Presentation of the DIA 2018 at Brasilia, Brazil
Ministry of Economy | Brasilia | Brazil

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Nov 29 2018
Presentation of the DIA 2018 at SEBOL, Bolivia
Universidad Privada de Santa Cruz | Santa Cruz de la Sierra | Bolivia

 

 

For registration and more information on the conference, click here

Nov 08 2018
Presentation of the DIA 2018 at LACEA
Washington, D. C. | United States of America | IDB Auditorium, Enrique V. Iglesias Conference Center

 

 

See event details

Nov 01 2018
Presentation of the DIA 2018 at London
London School of Economics | London | United Kingdom

 

 

See event details

Nov 01 2018
Presentation of the DIA 2018 at LSE
London School of Economics | London | United Kingdom

 

 

See event details

Oct 30 2018
Presentation of the DIA 2018 at Oxford Universty
University of Oxford | London | United Kingdom

 

 

See event details

Oct 30 2018
Presentation of the DIA 2018 at OECD
Organisation for Economic Co-operation and Development | London | United Kingdom

 

 

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Oct 29 2018
Presentation of the DIA 2018 at ICADE
Universidad Pontificia Comillas | Madrid | Spain

 

 

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Oct 29 2018
Presentation of the DIA 2018 at Banco de España
Banco de España | Madrid | Spain

 

 

See event details

Oct 29 2018
Presentation of the DIA 2018 at MINECO
Universidad Pontificia Comillas | Madrid | Spain

 

 

See event details

Oct 16 2018
Launch of the DIA 2018 in Washington D.C.
Washington, D. C.

 

 

See event details

How can this puzzle of larger demands and fiscal strengthening be solved? This edition of the development in the Americas (DIA) report focuses precisely on this question. The book suggests that the answer is about fiscal efficiency and smart spending rather than the standard solution of across-the-board spending cuts to achieve fiscal sustainability— sometimes at great cost for society. It is about doing more with less.

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453 pages
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DOI
http://dx.doi.org/10.18235/0001217-en
News

El dinero público malgastado en América Latina bastaría para acabar con la pobreza extrema

Las ineficiencias en los presupuestos gubernamentales de la región superan los 220.000 millones de dólares anuales, según el BID

2018-07-24
https://elpais.com/economia/2018/09/24/actualidad/1537762790_089270.html

La Argentina es el país con más gasto público ineficiente de la región: 7,2% del PBI

La Argentina es el país de la región con mayor gasto público ineficiente. En concreto, el Estado tiene ineficiencias potenciales en el rubro de compras, en el gasto en nómina salarial y en transferencias de subsidios por un monto equivalente al 7,2% del PBI, según un informe del Banco Interamericano de Desarrollo (BID) que se difundirá hoy.

2018-07-24
https://www.lanacion.com.ar/2174950-la-argentina-es-pais-mas-gasto-publico

Gasto público ineficiente en el país es de casi $50 billones

Estimaciones del BID señalan que entre compras públicas, transferencias y nómina estatal, casi el 5% del PIB se gira de forma incorrecta.

2018-10-11
https://www.portafolio.co/economia/gasto-publico-ineficiente-en-el-pais-es-de-c…

El ineficiente gasto público le pasa factura a América Latina

Un estudio del BID revela que la inoperancia en compras públicas, servicios y transferencias le costó a la región $ 220.000 millones al año; eso hubiera servido para eliminar la pobreza extrema.
 

2018-10-11
https://www.eltelegrafo.com.ec/noticias/economia/4/gasto-publico-america-latina…

Malgasto del Estado en compras y salarios alcanza a 3,7% del PIB

El Banco Interamericano de Desarrollo (BID) presentó un informe sobre el gasto público en los países de la región y en el ranking establecido Uruguay figura como uno de los menos ineficientes en su manejo.

2018-10-11
https://www.elobservador.com.uy/nota/malgasto-del-estado-en-compras-y-salarios-…

La eficiencia en el gasto del Estado bajo análisis del BID

Cuando de gasto público se trata, “los gobiernos latinoamericanos sufren tanto de ineficiencia técnica como ineficiencia asignativa. La primera tiene que ver con el hecho de no hacer las cosas de la mejor manera posible, dados los recursos disponibles” y la segunda con que los presupuestos “suelen asignarse según estándares históricos, y no considerando dónde sería más útil un dólar adicional”, señaló el presidente del Banco Interamericano de Desarrollo (BID), Luis Alberto Moreno en el informe del organismo “Mejor gasto para mejores vidas. Cómo América Latina y el Caribe puede hacer más con menos”, divulgado hoy.

2018-10-11
https://negocios.elpais.com.uy/noticias/eficiencia-gasto-analisis-bid.html

Malgasto de recursos públicos en Colombia llega a 4,8% del Producto Interno Bruto

BID ubicó al país en el quinto puesto en ineficiencia en la región

2018-10-11
https://www.larepublica.co/economia/el-malgasto-de-recursos-publicos-en-colombi…

BID dice que Colombia está entre países más ineficientes en uso de gasto público

Luis Alberto Moreno, presidente del Banco Interamericano de Desarrollo, habló del estudio publicado. 

2018-10-11
https://www.rcnradio.com/economia/bid-dice-que-colombia-esta-entre-paises-mas-i…

La ineficiencia del gasto público en Argentina alcanza el 7,2% del PBI

Es el número más grande de la región, según un estudio del BID. El dato negativo se acrecienta porque el país tiene el mayor gasto total en relación al PBI, casi un 50%

2018-10-11
https://www.cronista.com/amp/economiapolitica/La-ineficiencia-del-gasto-publico…

BID advierte que Colombia es uno de los países más ineficientes en uso del gasto público

Un análisis inédito del gasto público en América Latina y el Caribe revela enormes ineficiencias y malgasto que podrían llegar a costar hasta US$220.000 millones al año, o el equivalente al 4,4 por ciento del PIB de la región.

2018-10-11
https://www.dinero.com/internacional/articulo/banco-interamericano-advierte-ine…

La ineficiencia del gasto público cuesta 220,000 mdd en Latinoamérica

La ineficiencia del gasto público en los gobiernos de Latinoamérica y el Caribe generan pérdidas que ascienden a 220,000 millones de dólares (mdd) anualmente, equivalente al 4.4% del Producto Interno Bruto (PIB) regional, según un cálculo realizado por el Banco Interamericano de Desarrollo (BID).

2018-09-24
https://www.forbes.com.mx/la-ineficiencia-del-gasto-publico-cuesta-220000-mdd-e…

Alejandro Izquierdo: "Es posible reducir el gasto público sin tocar los rubros socialmente sensibles"

Alejandro Izquierdo hizo una disección de un mal endémico en América Latina en general y en la Argentina en particular: el gasto público . En el crecimiento exacerbado de este rubro y en la ineficiencia con la que se lo distribuye reside, quizás, el origen de todos los problemas económicos, por eso es interesante la visión que expone el economista jefe del Banco Interamericano de Desarrollo (BID), sobre la posibilidad de achicarlo sin provocar un estallido: "Es posible bajar el gasto público sin tocar los rubros socialmente sensibles".

2018-09-30
https://www.lanacion.com.ar/2176708-alejandro-izquierdo-es-posible-reducir-gast…

Ineficiencias en gasto público del Perú cuestan 2,5% del PBI al año

El domingo 7 de octubre se elegirá a más de 1.800 nuevas autoridades subnacionales, las que, sin considerar a Lima, tendrán la responsabilidad de casi dos tercios del presupuesto público. Por lo tanto, gran parte del futuro del país dependerá de las decisiones de los propios votantes. En este sentido, resulta relevante analizar la evolución de los gastos públicos en los últimos años según componentes de los gobiernos subnacionales, a fin de evaluar sus prioridades de gasto.

2018-10-01
https://elcomercio.pe/economia/peru/elecciones-importancia-decidir-noticia-5631…

Cuáles son los países de América Latina que gestionan mejor y peor sus fondos públicos, según el BID

En América Latina ha habido un "derroche" del gasto público en las últimas dos décadas.

Eso dice un un reciente informe del Banco Interamericano de Desarrollo (BID) que asegura que los países latinoamericanos han "malgastado" unos US$220.000 millones, equivalente al 4,4% del Producto Interno Bruto (PIB).

2018-10-15
https://www.bbc.com/mundo/noticias-america-latina-45827380

Chile tiene la sanidad más eficiente de Latinoamérica; Guatemala, la menos

Entre los 71 países analizados, 22 de 27 latinoamericanos y caribeños se sitúan en la mitad inferior de la tabla y, de ellos, 12 están en el último cuarto. Chile ocupa el octavo puesto (ver cuadro). El objetivo del estudio es, según Diana Pinto, especialista líder en salud del BID y una de las autoras, evaluar la eficacia y analizar en qué puede mejorar cada país a la hora de sacar el máximo partido al dinero invertido en sanidad, comparándolo con otros países del mundo. Esto será de especial importancia en un contexto macroeconómico que no pronostica grandes aumentos presupuestarios en la región.

2018-11-06
https://elpais.com/elpais/2018/08/29/planeta_futuro/1535496394_304932.html

Economistas del BID: "Hay que hacer una reingeniería completa de gasto público"

La tendencia de las economías latinoamericanas a recurrir, cada pocos años, a un déficit de sus cuentas fiscales llevó a especialistas del Banco Interamericano de Desarrollo (BID) a buscar respuestas a esta dinámica insostenible. Tras dos años de investigación, Alejandro Izquierdo y Carola Pessino, economistas y funcionarios del BID, junto a Guillermo Vuletin, del Banco Mundial, presentaron los resultados del libro "Mejor gasto para mejores vidas" en el Banco Central. Al concluir le concedieron una entrevista exclusiva a El Cronista.

2018-11-15
https://www.cronista.com/economiapolitica/Economistas-del-BID-Hay-que-hacer-una…

Why Latin American governments spend money badly

In costa rica’s rainy season, bright mornings yield with deceptive suddenness to tropical downpours. So it was on September 10th, when the country’s civil servants went on strike. They oppose a fiscal reform that raises some taxes and limits automatic wage increases. Universities and public offices were deserted. After blocking roads and a railway, many went home before the afternoon shower. Two months later, some are back at work. But teachers are still on strike and many state schools remain shut. With reform stalled, the currency is under pressure and investors have pushed up the cost of servicing the public debt.

2018-11-15
https://www.economist.com/the-americas/2018/11/17/why-latin-american-government…

Related Research

 

Other Related Research

M. Ardanaz, and A. Izquierdo (2021), "Current Expenditure Upswings in Good Times and Public Investment Downswings in Bad Times? New Evidence from Developing Countries", Journal of Comparative Economics.

M. Ardanaz, E. Cavallo, A, Izquierdo, and J. Puig (2021), "Growth-friendly fiscal rules? Safeguarding public investment from budget cuts through fiscal rule design", Journal of International Money and Finance, Volume 111.

L. Galeano, A. Izquierdo, J. Puig, C. Vegh, G. Vuletin (2021), "Can automatic government spending be procyclical?", National Bureau of Economic Research Working Paper 28521.

A. Izquierdo, J. Medina, J. Puig, D. Riera-Crichton, C. Vegh, and G. Vuletin (2019), "Is the public investment multiplier higher in developing countries? An empirical investigation", National Bureau of Economic Research Working Paper 26478.

 

Previous editions
Learning Better

Learning Better

Public policy skills development

Despite governments’ best efforts, many people in Latin America and the Caribbean don’t have the skills they need to thrive. This book looks at what policies work, and don’t work, so that governments can help people learn better and realize their potential throughout their lifetimes.

Saving for development

Saving for development

How Latin America and the Caribbean Can Save More and Better

Why should people—and economies—save? The typical answer usually focuses on the need to protect against future shocks, to smooth consumption during hard times, in short, to save for the proverbial rainy day. This book approaches the question from a slightly different angle.

Early years

The Early Years

Child Well-being and the Role of Public Policy

Child well-being matters for both ethical and economic reasons as children who flourish in the early years are more likely to become healthy, productive citizens later in life.

rethinking

Rethinking Productive Development

Sound Policies and Institutions for Economic Transformation

Anemic economic growth in Latin America and the Caribbean is in need of a post-Washington-Consensus policy shot in the arm. Unfortunately, the ghost of industrial policy casts a shadow over all efforts because it has often done more harm than good.

more than revenue

More than Revenue

Taxation as a Development Tool

More than Revenue aims to provide an up-to-date overview of the current state of taxation in the Latin American and Caribbean (LAC) region, its main reform needs, and possible reform strategies that take into account the likely economic, institutional, and political constraints on the reform process.

development

Room for Development

Housing Markets in Latin America and the Caribbean

This edition of the IDB's flagship publication, Development in the Americas, takes an in-depth look at the opportunities countries have to improve urban housing markets and pave the way for solutions that involve the private sector.

connections

Development Connections

Unveiling the Impact of New Information Technologies

Policymakers and academics agree that computers, the Internet, mobile telephones and other information and communication technologies can be beneficial for economic and social development. But how strong is the impact?

productivity

The Age of Productivity

Transforming Economies from the Bottom Up

The book provides tools to ponder productivity growth beyond conventional aggregate analysis, focusing on the extreme heterogeneity of sectors and firms while emphasizing the importance of policies that allow high productivity firms to thrive and expand.

Beyond Facts

Beyond Facts

Understanding Quality of Life

Using an enhanced version of the recently created Gallup World Poll, the Inter-American Development Bank surveyed people from throughout the region and found that perceptions of quality of life are often very different from the reality.

Meet the Editors
Alejandro Izquierdo

Alejandro Izquierdo

A citizen of Argentina, holds a PhD in Economics from the University of Maryland. He is chief economist and general manager a.i. of the Research Department of the Inter-American Development Bank. 
 

Carola Pessino

Carola Pessino

Citizen of Argentina, holds a PhD in Economics from the University of Chicago. She is principal specialist in the Fiscal and Municipal Management Division of the Inter-American Development Bank.

Guillermo Vuletin

Guillermo Vuletin

A citizen of Argentina, holds a PhD in Economics from the University of Maryland. He was a lead economist in the Research Department at the Inter-American Development Bank during the preparation of the report. He is currently a senior economist in the Office of the Regional Chief Economist for Latin America and the Caribbean at the World Bank.