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Productivity in the service sector in Colombia: the misallocation and innovation channels

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  • Pablo Sanguinetti
  • Andrés Feroce

Abstract

Latin America and the Caribbean have underperformed in economic growth compared to other developing regions like Southeast Asia or Eastern Europe. This has implied a low rate of income convergence with developed economies. For example, the average income per capita was around 0.20 of that of the USA in 1960 and went up to only 0.26 at the end of the second decade of the XXI century. Most growth accounting exercises (see Jones, 2019; Alvarez et al., 2018) show that weakened productivity dynamics is a critical immediate cause of this lack of convergence. In other words, the LAC countries have not improved their efficiency when using their resources at the firm level, sectors, and the aggregate economy.

Suggested Citation

  • Pablo Sanguinetti & Andrés Feroce, 2024. "Productivity in the service sector in Colombia: the misallocation and innovation channels," Department of Economics Working Papers 2025_04, Universidad Torcuato Di Tella.
  • Handle: RePEc:udt:wpecon:2025_04
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    References listed on IDEAS

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    2. Casaburi, Gabriel & Crespi, Gustavo & De León, Ignacio L. & Figal Garone, Lucas & Grazzi, Matteo & Guaipatín, Carlos & Katz, Jorge & Llisterri, Juan J. & Maffioli, Alessandro & Navarro, Juan Carlos & , 2016. "La política de innovación en América Latina y el Caribe: Nuevos caminos," IDB Publications (Books), Inter-American Development Bank, number 7705.
    3. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    4. Chang-Tai Hsieh & Peter J. Klenow, 2014. "The Life Cycle of Plants in India and Mexico," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1035-1084.
    5. Jones, C.I., 2016. "The Facts of Economic Growth," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 3-69, Elsevier.
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