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Misallocation and Manufacturing TFP in Bolivia during the Market Liberalization Period

Listed author(s):
  • Machicado Carlos Gustavo

    ()

    (Institute for Advanced Development Studies)

  • Birbuet Juan Cristobal

    ()

    (Centre for the Promotion of Sustainable Technologies)

This paper analyzes productivity dispersion in the Bolivian manufacturing sector during the Market Liberalization Period: 1988-2001. We analyze the effects of resource misallocation on manufacturing total factor productivity (TFP) with firm-level data and by employing the Hsieh and Klenow (2009) model. We found that if resource misallocation was eliminated, the gains in productivity would have been on the order of 54 percent on average and would have ranged from -6 percent to 38 percent relative to the United States (benchmark country). We also test if misallocation is related to reforms, and firm or geographical characteristics. There is suggestive evidence that the second-generation reforms were associated with an increase in the misallocation of resources that reached a peak in 1998, the year the economy experienced an important economic downturn.

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Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): 12 (2012)
Issue (Month): 1 (July)
Pages: 1-45

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Handle: RePEc:bpj:bejmac:v:12:y:2012:i:1:n:18
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References listed on IDEAS
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  1. Patrizio Pagano & Fabiano Schivardi, 2003. "Firm Size Distribution and Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(2), pages 255-274, June.
  2. Beatriz Muriel & Luis Carlos Jemio, 2010. "Mercado laboral y reformas en Bolivia," Capítulos de Libros PUCP / Chapters of PUCP books,in: José Rodríguez & Albert Berry (ed.), Desafíos laborales en América Latina después de dos décadas de reformas estructurales. Bolivia, Paraguay y Perú 1997-2008, edition 1, chapter 5, pages 273-356 Departamento de Economía - Pontificia Universidad Católica del Perú.
  3. 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.
  4. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
  5. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1403-1448.
  6. Barja, Gover, 1999. "Las reformas estructurales bolivianas y su impacto sobre inversiones
    [Bolivian structural reforms and their impact on investment]
    ," MPRA Paper 23479, University Library of Munich, Germany.
  7. Marcel P. Timmer & Gaaitzen J. de Vries, 2009. "Structural change and growth accelerations in Asia and Latin America: a new sectoral data set," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 3(2), pages 165-190, June.
  8. Pack, Howard & Westphal, Larry E., 1986. "Industrial strategy and technological change : Theory versus reality," Journal of Development Economics, Elsevier, vol. 22(1), pages 87-128, June.
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