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The Relation of Information Technologies and the Total Factor Productivity in Uruguayan Firms

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  • Miguel Mello Costa

    (Banco Central del Uruguay)

Abstract

The aim of this article is to determine if the development of information and communication technologies (ICT) had any impact on the productivity of Uruguayan firms. For that, the work exploits the advantages of the data panels to make a dynamic estimation of the total factors productivity (TFP). I used micro-data unbalanced panel for the period 2007-2014 in which 6,492 companies were surveyed. Short-term production functions were estimated for all firms y sectors, distinguishing fixed capital from technological capital and controlling for labour qualification. Results suggest that there are decreasing returns to scale. Technological capital is a factor that contributes to the gross product of Uruguayan firms. Although the period analyzed is characterized by a continuous GDP growth, Total Factor Productivity (TFP) was negative for all sectors. This TFP estimated is not constant for firms but is persistence, consistent with an AR(1) process. There is a positive correlation between ICT utilization and TFP and the performance is heterogeneous between sectors, according to the share of productive factors.

Suggested Citation

  • Miguel Mello Costa, 2018. "The Relation of Information Technologies and the Total Factor Productivity in Uruguayan Firms," Documentos de trabajo 2018004, Banco Central del Uruguay.
    • Handle: RePEc:bku:doctra:2018004
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    File URL: https://www.bcu.gub.uy/Estadisticas-e-Indicadores/Documentos%20de%20Trabajo/4.2018.pdf
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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