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On the Role of Productivity and Factor Accumulation in Economic Development in Latin America and the Caribbean

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  • Christian Daude

    (OECD)

  • Eduardo Fernández-Arias

    (Inter-American Development Bank)

Abstract

This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The region’s development performance is assessed in contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. We find that total factor productivity is the predominant factor: low and slow productivity, as opposed to impediments to factor accumulation, is the key to understand Latin America’s low income relative to developed economies and its stagnation relative to other developing countries that are catching up. While policies easing factor accumulation would help improving productivity somewhat, for the most part, closing the productivity gap requires productivity-specific policies. Afin d’estimer les rôles respectifs joués par la productivité totale des facteurs et l’accumulation des facteurs de production sur la performance de développement économique de l’Amérique latine, cet article combine des exercices comptables de développement et de croissance avec la théorie économique. La performance de la région est évaluée en comparaison avec différents benchmarks issus à la fois de pays riches et de pays en développement d’autres régions. Les résultats montrent que la productivité totale des facteurs est l’élément prédominant pour comprendre le faible revenu de l’Amérique latine par rapport à celui des pays développés, et sa stagnation par rapport à d’autres pays en développement qui sont en train de les rattraper. L’explication repose ainsi sur la faible productivité dans les économies de la région, et sa lente croissance,, et non sur l’existence d’un quelconque obstacle à l’accumulation de facteurs. Même si les politiques publiques facilitant l’accumulation de facteurs pourraient dans une certaine mesure améliorer la productivité globale, l’important est de s’orienter vers des politiques publiques centrées spécifiquement sur la productivité, et ce afin de diminuer les écarts de performance entre l’Amérique latine et les pays développés.

Suggested Citation

  • Christian Daude & Eduardo Fernández-Arias, 2010. "On the Role of Productivity and Factor Accumulation in Economic Development in Latin America and the Caribbean," OECD Development Centre Working Papers 290, OECD Publishing.
  • Handle: RePEc:oec:devaaa:290-en
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    File URL: http://dx.doi.org/10.1787/5kmh5gpqtdjc-en
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    References listed on IDEAS

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    Cited by:

    1. Julián Caballero, 2012. "Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises?: Cross-Country Evidence on Bonanzas in Capital Inflows and Bonanza-Boom-Bust Cycles," IDB Publications (Working Papers) 3971, Inter-American Development Bank.
    2. Eduardo Fernández-Arias & Sergio Rodríguez-Apolinar, 2016. "The Productivity Gap in Latin America: Lessons from 50 Years of Development," IDB Publications (Working Papers) 94097, Inter-American Development Bank.
    3. Matías Busso & Maria Victoria Fazio & Santiago Levy Algazi, 2012. "(In)Formal and (Un)Productive: The Productivity Costs of Excessive Informality in Mexico," IDB Publications (Working Papers) 4047, Inter-American Development Bank.
    4. Matias Busso & Maria Victoria Fazio & Santiago Levy Algazi, 2012. "(In)Formal and (Un)Productive: The Productivity Costs of Excessive Informality in Mexico," Research Department Publications 4789, Inter-American Development Bank, Research Department.
    5. Arlen Guarín & Carlos Medina & Jorge Andrés Tamayo, 2013. "The Effects of Punishment of Crime in Colombia on Deterrence, Incapacitation, and Human Capital Formation," BORRADORES DE ECONOMIA 010972, BANCO DE LA REPÚBLICA.
    6. Busso Matias & Madrigal Lucia & Pagés Carmen, 2013. "Productivity and resource misallocation in Latin America," The B.E. Journal of Macroeconomics, De Gruyter, pages 1-30.
    7. Úbeda, Ricardo & Alsua, Carlos & Carrasco, Nelson, 2015. "Purchasing models and organizational performance: a study of key strategic tools," Journal of Business Research, Elsevier, vol. 68(2), pages 177-188.
    8. Carolina Arteaga Cabrales, 2011. "Human Capital Externalities and Growth," Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 29(66), pages 12-47, Diciembre.
    9. Eduardo Lora, 2013. "The Distance between Perception and Reality in the Social Domains of Life," Research Department Publications IDB-WP-423, Inter-American Development Bank, Research Department.
    10. Manuel Agosin & Cristian Larraín & Nicolás Grau, 2009. "Industrial policy in Chile," Working Papers wp294, University of Chile, Department of Economics.
    11. Jorge Thompson Araujo & Markus Brueckner & Mateo Clavijo & Ekaterina Vostroknutova & Konstantin M. Wacker, 2014. "Benchmarking the Determinants of Economic Growth in Latin America and the Caribbean," World Bank Other Operational Studies 21318, The World Bank.
    12. Christian Daude, 2012. "Development Accounting: Lessons for Latin America," OECD Development Centre Working Papers 313, OECD Publishing.
    13. Marco Manacorda & Martin Foureaux Koppensteiner, 2013. "The Effect of Violence on Birth Outcomes: Evidence from Homicides in Rural Brazil," IDB Publications (Working Papers) 4613, Inter-American Development Bank.
    14. Jorge Thompson Araujo & Markus Brueckner & Mateo Clavijo & Ekaterina Vostroknutova & Konstantin M. Wacker, 2014. "Beyond Commodities," World Bank Other Operational Studies 21807, The World Bank.
    15. Jorge Thompson Araujo & Ekaterina Vostroknutova & Markus Brueckner & Mateo Clavijo & Konstantin M. Wacker, 2016. "Beyond Commodities," World Bank Publications, The World Bank, number 25321.
    16. Omar Chisari & Sebastian Galiani & Sebastian Miller, 2013. "Optimal Adaptation and Mitigation to Climate Change in Small Environmental Economies," Research Department Publications IDB-WP-417, Inter-American Development Bank, Research Department.
    17. Eric Rougier & Riana Razafimandimby Andrianjaka, 2017. "What difference does it make (when a middle-income country is caught in the trap)? An evidence-based survey analysis of the determinants of Middle-Income Traps," Cahiers du GREThA 2017-16, Groupe de Recherche en Economie Théorique et Appliquée.

    More about this item

    Keywords

    Amérique latine; croissance économique; development; développement; economic growth; Latin America; productivité totale des facteurs; total factor productivity;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • 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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