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Productivity and Resource Misallocation in Latin America

  • Matias Busso

    ()

  • Lucia Madrigal

    ()

  • Carmen Pages-Serra

    ()

Total factor productivity (TFP) in Latin America has not increased since the mid- 1970s, and in many countries it has declined. Moreover, resource misallocation can lower aggregate TFP. This paper presents evidence based on firm-level data from 10 Latin American countries to quantify the heterogeneity of firm productivity and the degree of resource misallocation within countries. Productivity heterogeneity and resource misallocation are found to be much larger than in the United States. Achieving an efficient allocation of resources could boost manufacturing TFP between 45 percent and 127 percent depending on the countries and years considered.

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Paper provided by Inter-American Development Bank, Research Department in its series Research Department Publications with number 4753.

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Date of creation: Apr 2012
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Handle: RePEc:idb:wpaper:4753
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  1. Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1181-1222, December.
  2. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2004. "The Effects of Structural Reforms on Productivity and Profitability Enhancing Reallocation: Evidence from Colombia," Working Papers 134, Barcelona Graduate School of Economics.
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  13. Vries, G.J. de, 2009. "Productivity in a Distorted Market: The Case of Brazil's Retail Sector," GGDC Research Memorandum GD-112, Groningen Growth and Development Centre, University of Groningen.
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