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Misallocation and Productivity in Colombia's Manufacturing Industries

Author

Listed:
  • Camacho, Adriana
  • Conover, Emily

Abstract

Following Hsieh and Klenow (2009), this paper studies productivity dispersions in Colombian industrial establishments using the Colombian Annual Manufacturing Survey (AMS) from 1982 to 1998. The United States is used as a benchmark to estimate the reallocation of capital and labor to equalize marginal products across plants in Colombia. Gains are found in manufacturing Total Factor Productivity (TFP) of approximately 3-8 percent and TPF is positively correlated with exporting status, age, size, and location in the central region of the country. There is also suggestive evidence that opening the economy in 1991 is associated with an increase in plant productivity levels for firms that export goods. The 1990 reform that reduced dismissal costs is associated with an increase in productivity, while the reform that increased labor costs in 1993 is associated with a decrease in plants productivity. Further work is needed to establish a causal relation between productivity and policy changes.

Suggested Citation

  • Camacho, Adriana & Conover, Emily, 2010. "Misallocation and Productivity in Colombia's Manufacturing Industries," IDB Publications (Working Papers) 1699, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1699
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    Cited by:

    1. Jan Hagemejer & Peter Szewczyk & Joanna Tyrowicz, 2018. "Misallocations go a long way: evidence from firm-level data," GRAPE Working Papers 31, GRAPE Group for Research in Applied Economics.
    2. Doan Thi Thanh Ha & Kozo Kiyota, 2015. "Misallocation, Productivity, and Trade Liberalization: The Case of Vietnamese Manufacturing," Keio-IES Discussion Paper Series 2015-007, Institute for Economics Studies, Keio University.
    3. Ana María Tribín-Uribe & Achyuta Adhvaryu & Cesar Anzola-Bravo & Oscar Ávila-Montealegre & Leonardo Bonilla-Mejía & Juan Carlos Castro-Fernández & Luz A. Flórez & Ánderson Grajales-Olarte & Alexander , 2020. "Migración desde Venezuela en Colombia: caracterización del fenómeno y análisis de los efectos macroeconómicos," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, issue 97, pages 1-74, October.
    4. Richard M. Bird & Michael Smart, 2012. "Financing Social Expenditures in Developing Countries: Payroll or Value Added Taxes?," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1206, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Kaiji Chen & Alfonso Irarrazabal, 2015. "The Role of Allocative Efficiency in a Decade of Recovery," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 523-550, July.
    6. 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.
    7. Ryzhenkov, Mykola, 2016. "Resource misallocation and manufacturing productivity: The case of Ukraine," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 41-55.
    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. Doan Thi Thanh Ha & Kozo Kiyota & Kenta Yamanouchi, 2016. "Misallocation and Productivity: The Case of Vietnamese Manufacturing," Asian Development Review, MIT Press, vol. 33(2), pages 94-118, September.
    10. Andrés Álvarez & Juan Camilo Chaparro & Carolina Gonz�lez & Santiago Levy & Dar�o Maldonado & Marcela Mel�ndez & Natalia Ram�rez & Marta Juanita Villaveces, 2022. "Reporte ejecutivo de la Misión de Empleo de Colombia," Documentos de trabajo 20156, Escuela de Gobierno - Universidad de los Andes.
    11. Siwapong Dheera Aumpon, 2018. "Resource Misallocation and Rice Productivity in Thailand," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 14(2), pages 143-153.
    12. Muhammad Haseeb & Theresa Thompson Chaudhry, 2014. "Resource Misallocation and Aggregate Productivity in Punjab," CREB Working papers 1-2014, Centre for Research in Economics and Business, The Lahore School of Economics, revised 2014.
    13. 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.
    14. Kaiji Chen & Alfonso Irarrazabal, 2013. "Misallocation and the recovery of manufacturing TFP after a financial crisis," Working Paper 2013/01, Norges Bank.

    More about this item

    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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