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Misallocation and Manufacturing TFP in Bolivia during the Market Liberalization Period

Author

Listed:
  • 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
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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 Fondo Editorial - 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 Daza, Gover, 1999. "Las reformas estructurales bolivianas y su impacto sobre inversiones," Series Históricas 42, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    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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    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, Asia Pacific School of Economics and Government, The Australian National University, vol. 28(2), pages 63-76, November.
    3. Daniel Dias & Christine Richmond & Carlos Robalo Marques, 2016. "A tale of two sectors: why is misallocation higher in services than in manufacturing?," Working Papers w201614, Banco de Portugal, Economics and Research Department.
    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. Ryzhenkov, Mykola, 2016. "Resource misallocation and manufacturing productivity: The case of Ukraine," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 41-55.
    6. repec:eee:quaeco:v:66:y:2017:i:c:p:294-301 is not listed on IDEAS
    7. Daniel Dias & Christine Richmond & Carlos Robalo Marques, 2014. "Misallocation and productivity in the lead up to the Eurozone crisis," Working Papers w201411, Banco de Portugal, Economics and Research Department.
    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.

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