Nowadays, in fact, taxes, legislation, and rules shape many of the incentives at the base of an individual’s decisions.
This, and many other insights were at the center of Santiago Levy’s presentation at the School of International and Public Affairs (SIPA), Columbia University on April 25, where he discussed the findings of his latest effort, “Under-Rewarded Efforts: The Elusive Quest for Prosperity in Mexico”. In his book, Levy finds evidenced-based explanations for the conundrum that interested many academics and practitioner of his time: how could Mexico, an economy that has done so many things right, end up with disappointing results in terms of growth, productivity and social inclusion?
The answer, according to Levy, lies in the poor institutional setting within which many of these reforms were implemented. Mexico’s efforts to invest in human capital and education and implement anti-poverty measures and trade liberalizations are just a few examples of the good policies approved in the last decades. But the country was undoing at night all the good jobs completed during the day - the benefits of the reforms were nullified by dysfunctional labor market regulations, perverse taxation schemes and poor legal environment. Informality increased during the period, despite all the measures adopted. The under-performance of the less productive parts of the economy was actually undoing whatever progress the better performing parts generated.
Levy’s ability to combine sound economic frameworks and a pragmatic approach to complex public policy topics remind all aspiring practitioners at SIPA about the difficulties of shaping government economic policy. It’s an example that will be useful to those that dream about improving the life of their citizens and communities.
Santiago Levy is a Nonresident Senior Fellow with the Global Economy and Development Program at Brookings and President of the Latin American and Caribbean Economic Association. From 2008 to 2018 he was the Vice President for Sectors and Knowledge at the Inter-American Development Bank. From 1994 to 2000, he served as the Deputy Minister at the Ministry of Finance and Public Credit of Mexico. He was also General Director of the Mexican Social Security Institute from 2000 to 2005
Mr. Levy has published six books, 24 articles in academic journals and 20 book chapters. His latest book on economic growth in Mexico, “Under-Rewarded Efforts, The Elusive Quest for Prosperity in Mexico” was published in 2018 by the Inter-American Development Bank.
