abstract: 'It is clear that in the transition out of the COVID-19 crisis in

  Colombia there will be great need for formal job creation. One source

  that has been widely discussed in policy circles is strengthening

  linkages of Colombian firms with Global Value Chains (GVCs). Another

  source that has received recent attention, and deservedly so, is digital

  infrastructure development (DID)-which can boost telework and virtual

  human capital accumulation. Reduction in poverty and inequality through

  more and better formal employment is an important aspect of a jobs and

  economic transformation (JET) agenda. In this paper, we explore-through

  a computable general equilibrium model (CGE) and a microsimulation

  framework-to what extent reforms of the type envisioned in the JET

  agenda and which could generate GVC linkages, as well as through DID,

  for Colombia, and we project their impact on poverty and inequality up

  to 2030. Our findings show limited impact of the three types of policy

  changes considered for GVCs-namely (i) fall in barriers for seamless

  business logistics, (ii) reductions in tariffs, and (iii) lower barriers

  to foreign direct investment (FDI). The impact of DID on inequality is

  also moot. There is however a modest impact on poverty reduction in the

  combined policy of digital infrastructure with a boost in skilled labor.

  This finding can be linked to different factors. First, there are

  relatively few direct jobs created to benefit households with low levels

  of human capital. Second, there might be indirect job creation through

  backward linkages to local suppliers by firms linked to GVCs, but this

  effect would be a general equilibrium effect that our CGE model with a

  partial equilibrium microsimulation distributional module does not fully

  capture. Third, the positioning of Colombian firms to latch onto GVCs,

  and also generate demand for local intermediate inputs and services, is

  not optimal. Fourth, DID may generate more general labor market

  opportunities through telework and virtual learning expansions but could

  also induce larger wage gaps as the skill premium rises so that the net

  effect on inequality is ambiguous.'
affiliation: 'Kugler, MD (Corresponding Author), George Mason Univ, Schar Sch Policy
  \& Govt, Ctr Microecon Policy Res CMEPR, Arlington, VA 22201 USA.

  del Carpio, Ximena; Cuesta, Jose A., World Bank, Washington, DC 20433 USA.

  Kugler, Maurice D., George Mason Univ, Schar Sch Policy \& Govt, Ctr Microecon Policy
  Res CMEPR, Arlington, VA 22201 USA.

  Hernandez, Gustavo; Piraquive, Gabriel, Santafe Bogota, Div Estudios Especiales,
  Dept Nacl Planeac, Bogota, Colombia.'
article-number: '43'
author: del Carpio, Ximena and Cuesta, Jose A. and Kugler, Maurice D. and Hernandez,
  Gustavo and Piraquive, Gabriel
author-email: 'xdelcarpio@worldbank.org

  jcuesta@worldbank.org

  mkugler@gmu.edu

  ghernandez@dnp.gov.co

  gpiraquive@dnp.gov.co'
author_list:
- family: del Carpio
  given: Ximena
- family: Cuesta
  given: Jose A.
- family: Kugler
  given: Maurice D.
- family: Hernandez
  given: Gustavo
- family: Piraquive
  given: Gabriel
da: '2023-09-28'
doi: 10.3390/jrfm15020043
eissn: 1911-8074
files: []
issn: 1911-8066
journal: JOURNAL OF RISK AND FINANCIAL MANAGEMENT
keywords: 'COVID-19 pandemic; aggregate supply and demand shocks; income fall;

  poverty; inequality; JET; GVCs; productivity; formal employment; wages;

  CGE; microsimulations'
keywords-plus: FOREIGN DIRECT-INVESTMENT; LABOR; GROWTH; PRICES; PLANTS
language: English
month: FEB
number: '2'
number-of-cited-references: '60'
orcid-numbers: Kugler, Maurice/0000-0002-1977-5274
papis_id: 8c2822c56f983eb0352daa9b4b9326d4
ref: Delcarpio2022whateffects
times-cited: '4'
title: What Effects Could Global Value Chain and Digital Infrastructure Development
  Policies Have on Poverty and Inequality after COVID-19?
type: article
unique-id: WOS:000769714300001
usage-count-last-180-days: '4'
usage-count-since-2013: '14'
volume: '15'
web-of-science-categories: Business, Finance
year: '2022'