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Market Reforms and Efficiency Gains in Chile

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  • Raphael Bergoeing

    ()

  • Andr�s Hernando
  • Andrea Repetto

    ()

Abstract

Starting in the mid 1970s, Chile implemented a deep and comprehensive set of structural market reforms. In spite of the wide agreement there is with respect to the expected benefits these reforms should have on growth, little evidence has been provided to empirically establish and to quantify this connection. Using plant-level data on Chilean manufacturing firms for the 1980-2001 period, we provide such evidence. In particular, we estimate disaggregate total factor productivity (TFP) and decompose its dynamics into production reallocation and within plant efficiency changes to study aggregate efficiency, a fundamental source of aggregate growth. We find that during the 1990s, when most reforms had already been fully implemented, both the level and dispersion of TFP grew steadily. These efficiency gains were explained in equal proportions by within plant changes and by the net entry of new and more productive economic units. The reallocation among incumbent plants did not contribute significantly to the enhancement of efficiency, however. Finally, we also show that within-plant efficiency gains were the largest among firms producing traded goods, and among firms that were more likely to face binding liquidity constraints. Thus, in Chile, the adoption of better technologies and production processes, fostered by broader foreign exposure and a superior access to external finance, seem to have accounted for the observed improvement in manufacturing performance.

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Bibliographic Info

Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 207.

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Date of creation: 2005
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Handle: RePEc:edj:ceauch:207

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Cited by:
  1. Bas, Maria & Ledezma, Ivan, 2007. "Market Access and the Evolution of within Plant Productivity in Chile," Economics Papers from University Paris Dauphine 123456789/6913, Paris Dauphine University.
  2. Klaus Schmidt-Hebbel, 2006. "Chile's Economic Growth," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 5-48.
  3. Ledezma, Ivan & Bas, Maria, 2010. "Trade Integration and Within-Plant Productivity Evolution in Chile," Economics Papers from University Paris Dauphine 123456789/6910, Paris Dauphine University.
  4. Roberto Álvarez & Álvaro García & Pablo García, 2008. "Energy Costs and Productivity in Chilean Manufacturing Industry," Working Papers Central Bank of Chile 482, Central Bank of Chile.
  5. Ezra Oberfield, 2013. "Productivity and Misallocation During a Crisis: Evidence from the Chilean Crisis of 1982," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 100-119, January.
  6. repec:hal:wpaper:halshs-00590303 is not listed on IDEAS
  7. Raphael Bergoeing & Andrea Repetto, 2006. "Micro Efficiency and Aggregate Growth in Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 169-192.
  8. repec:hal:wpaper:halshs-00588309 is not listed on IDEAS

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