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Misallocation and Manufacturing TFP in Bolivia during the Market Liberalization Period

Author

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  • Machicado Carlos Gustavo

    (Institute for Advanced Development Studies)

  • Birbuet Juan Cristobal

    (Centre for the Promotion of Sustainable Technologies)

Abstract

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.

Suggested Citation

  • Machicado Carlos Gustavo & Birbuet Juan Cristobal, 2012. "Misallocation and Manufacturing TFP in Bolivia during the Market Liberalization Period," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-45, July.
    • Handle: RePEc:bpj:bejmac:v:12:y:2012:i:1:n:18
    DOI: 10.1515/1935-1690.2304
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    References listed on IDEAS

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    Cited by:

    1. Ryzhenkov, Mykola, 2016. "Resource misallocation and productivity in Ukrainian food industry," 155th Seminar, September 19-21, 2016, Kiev, Ukraine 245173, European Association of Agricultural Economists.
    2. Siwapong Dheera-Aumpon, 2014. "Misallocation and manufacturing TFP in Thailand," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 28(2), pages 63-76, November.
    3. Daniel A. Dias & Carlos Robalo Marques & Christine Richmond, 2020. "A Tale of Two Sectors: Why is Misallocation Higher in Services than in Manufacturing?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 361-393, June.
    4. Murat Ungor, 2017. "Productivity Growth and Labor Reallocation: Latin America versus East Asia," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 24, pages 25-42, March.
    5. Carlos Gustavo Machicado Salas, 2018. "De Las Causas Próximas A Las Causas Profundas Del Crecimiento Económico De Bolivia Entre 1950 Y 2015," Development Research Working Paper Series 09/2018, Institute for Advanced Development Studies.
    6. Ryzhenkov, Mykola, 2016. "Resource misallocation and manufacturing productivity: The case of Ukraine," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 41-55.
    7. López, José Joaquín, 2017. "Financial frictions and productivity: Evidence from Mexico," The Quarterly Review of Economics and Finance, Elsevier, vol. 66(C), pages 294-301.
    8. Dias, Daniel A. & Robalo Marques, Carlos & Richmond, Christine, 2016. "Misallocation and productivity in the lead up to the Eurozone crisis," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 46-70.
    9. Flora Bellone & Jérémy Mallen-Pisano, 2013. "Is Misallocation Higher in France than in the United States?," GREDEG Working Papers 2013-38, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

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