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Understanding productivity levels, growth and dispersion in the textiles sector in Argentina: an o-ring story of low-productivity trap

Author

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  • Sánchez, Gabriel

    (Banco Interamericano de Desarrollo)

  • Butler, Inés

    (Instituto de Estudios sobrela Realidad Argentina y Latinoamericana)

Abstract

We use case study techniques to analyze the determinants of the marked productivity decline experienced by the textiles sector in Argentina since 1996. We find that, given the observed complementarity in the qualities chosen by different firms in this sector, low productivity results from a failure to coordinate in the investment in quality upgrading technologies by all firms. The sector was pushed to a poor productivity equilibrium by adverse financial shocks that combined with capital wedges to prompt some firms to invest in lower quality or to exit the market, propagating to the other firms through the quality complementarity.

Suggested Citation

  • Sánchez, Gabriel & Butler, Inés, 2010. "Understanding productivity levels, growth and dispersion in the textiles sector in Argentina: an o-ring story of low-productivity trap," Revista de Economía Política de Buenos Aires, Universidad de Buenos Aires. Facultad de Ciencias Económicas., issue 7-8, pages 49-102, December.
  • Handle: RePEc:ake:repba1:y:2010:i:7-8:p:49-102
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