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Politics, Policies and the Dynamics of Aggregate Productivity in Colombia

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  • Marcela Eslava
  • Marcela Melendez

Abstract

This paper describes private actors’ involvement in Colombia’s policymaking process. While more transparent and formal channels are used to discuss horizontal policies, they are also less effective. The adoption of targeted policies, however, follows a faster track and depends more on political power than on those policies’ potential as engines for productivity growth. Data targeted policies and political characteristics across sector-region units are used to further characterize the different groups’ weight in policymaking, and the effect of the implied unbalance on aggregate productivity. Electoral weight and being represented by business groups and associations are found to be important determinants of the policy benefits received by a sector in a region, especially when activities are located in regions affected by armed conflict. It is also found that the resulting imbalance of policies damages aggregate productivity.

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Bibliographic Info

Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4633.

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Date of creation: Sep 2009
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Handle: RePEc:idb:wpaper:4633

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Keywords: Productivity; political economy; interest groups; targeted policies;

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References

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  1. Mauricio Cárdenas & Roberto Junguito & Mónica Pachón, 2005. "Political Institutions and Policy Outcomes in Colombia: the Effects of the 1991 Constitution," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 003344, FEDESARROLLO.
  2. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
  3. Lucia Foster & John Haltiwanger & Chad Syverson, 2005. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," NBER Working Papers 11555, National Bureau of Economic Research, Inc.
  4. Quintero Luis Eduardo, 2006. "The Politics of Market Selection," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.
  5. Marcela Meléndez Arjona & Arturo Harker, 2008. "Revisiting Economic Growth in Colombia: A Microeconomic Perspective," IDB Publications 45218, Inter-American Development Bank.
  6. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November.
  7. Juan Carlos Echeverry & Mauricio Santamaria, 2004. "The Political Economy Of Labor Reform In Colombia," DOCUMENTOS CEDE 003618, UNIVERSIDAD DE LOS ANDES-CEDE.
  8. Fernandes, Ana M., 2003. "Trade policy, trade volumes, and plant-level productivity in Colombian manufacturing industries," Policy Research Working Paper Series 3064, The World Bank.
  9. Chang-Tai Hsieh & Peter J. Klenow, 2007. "Misallocation and Manufacturing TFP in China and India," Discussion Papers 07-006, Stanford Institute for Economic Policy Research.
  10. Alesina, A. & Drazen, A., 1991. "Why Are Stabilizations Delayed?," Papers 6-91, Tel Aviv - the Sackler Institute of Economic Studies.
  11. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  12. Eric J. Bartelsman & Mark Doms, 2000. "Understanding productivity: lessons from longitudinal microdata," Finance and Economics Discussion Series 2000-19, Board of Governors of the Federal Reserve System (U.S.).
  13. Rettberg Angelika, 2001. "The Political Preferences of Diversified Business Groups: Lessons from Colombia (1994-1998)," Business and Politics, De Gruyter, vol. 3(1), pages 1-18, April.
  14. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2006. "Plant Turnover and Structural Reforms in Colombia," IMF Staff Papers, Palgrave Macmillan, vol. 53(si), pages 3.
  15. Mauricio Olivera & Monica Pachon & Guillermo Perry, 2010. "The Political Economy of Fiscal Reform: The Case of Colombia, 1986-2006," Research Department Publications 4674, Inter-American Development Bank, Research Department.
  16. Adolfo Meisel R., 1996. "Why No Hyperinflation In Colombia? On The Determinants Of Stable Economic Policies," BORRADORES DE ECONOMIA 003780, BANCO DE LA REPÚBLICA.
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Cited by:
  1. Marcela Melendez & Guillermo Perry, 2010. "Industrial Policies in Colombia," Research Department Publications 4669, Inter-American Development Bank, Research Department.

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