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Politics, Policies and the Dynamics of Aggregate Productivity in Colombia

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Author Info
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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Paper provided by Inter-American Development Bank, Research Department in its series RES Working Papers 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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Related research
Keywords: Productivity; political economy; interest groups; targeted policies;

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Find related papers by JEL classification:
O43 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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  1. Fernandes, Ana M., 2007. "Trade policy, trade volumes and plant-level productivity in Colombian manufacturing industries," Journal of International Economics, Elsevier, vol. 71(1), pages 52-71, March. [Downloadable!] (restricted)
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  2. Eric J. Bartelsman & Mark Doms, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September. [Downloadable!] (restricted)
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  3. Angelika Rettberg, 2001. "The Political Preferences of Diversified Business Groups: Lessons from Colombia (1994-1998)," Business and Politics, Berkeley Electronic Press, vol. 3(1). [Downloadable!]
  4. Alesina, A. & Drazen, A., 1991. "Why Are Stabilizations Delayed?," Papers 6-91, Tel Aviv - the Sackler Institute of Economic Studies.
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  5. 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. [Downloadable!] (restricted)
  6. Adolfo Meisel R., 1996. "Why No Hyperinflation In Colombia? On The Determinants Of Stable Economic Policies," BORRADORES DE ECONOMIA 003780, BANCO DE LA REPÚBLICA. [Downloadable!]
  7. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March. [Downloadable!]
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  8. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November. [Downloadable!] (restricted)
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  9. Juan Carlos Echeverry & Mauricio Santamaria, 2004. "The Political Economy Of Labor Reform In Colombia," DOCUMENTOS CEDE 003618, UNIVERSIDAD DE LOS ANDES-CEDE. [Downloadable!]
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  10. Mauricio Cardenas & Roberto Junguito & Mónica Pachón, 2006. "Political Institutions and Policy Outcomes in Colombia: The Effects of the 1991 Constitution," RES Working Papers 3198, Inter-American Development Bank, Research Department. [Downloadable!]
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