Scielo RSS <![CDATA[Latin american journal of economics]]> vol. 53 num. 1 lang. pt <![CDATA[SciELO Logo]]> <![CDATA[<strong>OUR FINAL ISSUE</strong>]]> <![CDATA[<strong>R&D AND NON-R&D INNOVATORS DURING THE GLOBAL FINANCIAL CRISIS</strong>: <strong>THE ROLE OF BINDING CREDIT CONSTRAINTS</strong>]]> This analysis identifies the effects of prevailing credit constraints on efforts of formal R&D innovators and (informal) non-R&D innovators in the manufacturing sector in Latin America and examines whether the global financial crisis aggravated these effects. It demonstrates that formal R&D innovators faced binding credit constraints that severely disturbed their innovative efforts, while non-R&D innovators remained unaffected. Furthermore, the global financial crisis put no additional strain on either R&D or non-R&D innovators. The analysis also identifies characteristics of R&D and non-R&D innovators and points to important differences in size, age, or ownership structure but similarities in international trading activities. <![CDATA[<strong>DOES INDUSTRIAL EMPLOYMENT REACT TO MOVEMENTS IN THE REAL EXCHANGE RATE?</strong>: <strong>AN EMPIRICAL ANALYSIS FOR COLOMBIA, 2000-2010</strong>]]> To determine the effect of the real exchange rate on Colombia’s industrial employment and 59 industrial sectors for the period 2000-2010, we used the generalized method of moments of Arellano and Bond (1991) and data from the Annual Manufacturing Survey of the National Administrative Department of Statistics (DANE). Our findings reveal that a real appreciation of the Colombian peso decreases the country’s manufacturing employment, and disaggregation by industrial sector shows that a real appreciation of the Colombian peso had a negative impact on manufacturing employment in 18 industrial sectors and a positive impact in seven. <![CDATA[<strong>THE RIGHT FIT FOR THE WRONG REASONS</strong>: <strong>REAL BUSINESS CYCLE IN AN OIL-DEPENDENT ECONOMY</strong>]]> Venezuela has an oil-dependent economy subject to large exogenous shocks and a rigid labor market. These features go straight to the heart of two weaknesses of real business cycle (RBC) theory widely reported in the literature: neither shocks are volatile enough nor real salaries sufficiently flexible as required by the RBC framework to replicate the behavior of the economy. We calibrate a basic RBC model and compare a set of relevant statistics from RBC-simulated time series with actual data for Venezuela and the benchmark case of the United States (1950-2008). Despite Venezuela being a heavily regulated economy, RBC-simulated series provide a good fit, in particular with regard to labor markets. <![CDATA[<strong>INSTITUTIONAL IMPACT OF BRAIN DRAIN, HUMAN CAPITAL, AND INEQUALITY</strong>: <strong>A POLITICAL ECONOMY ANALYSIS</strong>]]> This paper uses an "exit and voice" political economy model to examine the institutional impact of brain drain, human capital, and inequality. Some of the main findings are: 1) the impact of brain drain m on institutional quality is L-shaped, with a maximum at m = 0; 2) the institutional impact of human capital h is L-shaped; 3) the likelihood that institutions will improve with m (h) is inversely related to international (domestic) inequality. Thus, the prospect that institutions will improve with human capital is likely to be small in SSA and LAC, where income inequality is substantially higher than in East Asia. <![CDATA[<strong>COST OF CAPITAL IN EMERGING MARKETS</strong>: <strong>BRIDGING GAPS BETWEEN THEORY AND PRACTICE</strong>]]> An important parameter for asset and project valuation is the opportunity cost of the capital invested, which depends on the systematic risks assumed. Having many angles, the existing literature has not fully resolved the issue for emerging markets. The evidence reviewed in this article suggests that we should at least consider exposure to market risk and country credit risk factors. After reviewing the theoretical and applied literature on cost of capital determination and international asset pricing models, the paper identifies and applies methodologies to determine discount rates applicable to emerging markets for different countries and currencies and develops methodologies for empirically measuring exposure to the country credit risk factor.