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The performance of firms in Latin America and the Caribbean: Microeconomic factors and the role of innovation

Author

Listed:
  • Grazzi, Matteo
  • Pietrobelli, Carlo
  • Szirmai, Adam

    (UNU-MERIT)

Abstract

The low productivity of Latin American and Caribbean economies has been acknowledged as a serious problem that calls for detailed analyses and appropriate and timely responses. However, in addition to macroeconomic and regulatory factors, productivity depends crucially on microeconomic aspects and on the specific strategies and decisions of individual firms. Such microeconomic decisions have been seldom studied in a quantitative and comparative manner. This paper addresses this gap in the literature. The paper presents the results of recent original microeconomic evidence, showing that innovation significantly influences the productivity of firms, although to different degrees depending on the characteristics of the firms. Moreover, the evidence confirms that the impact of innovation on productivity depends also on additional complementary assets, such as access and use of ICT and on-the-job training. Our analysis reveals that these conclusions also hold true for the Caribbean economies, traditionally understudied. Additional factors that can influence productivity have also been detected, such the age of firms, their access to credit and finance, and their participation in international markets and global value chains. The paper concludes by stating that a thorough understanding of these complex phenomena and their interrelations is an essential condition for the design of more effective public policies.

Suggested Citation

  • Grazzi, Matteo & Pietrobelli, Carlo & Szirmai, Adam, 2015. "The performance of firms in Latin America and the Caribbean: Microeconomic factors and the role of innovation," MERIT Working Papers 041, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2015041
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    File URL: https://www.merit.unu.edu/publications/wppdf/2015/wp2015-041.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Latin America and Caribbean; Firm Productivity; Research and Development; Innovation; ICT; Microeconomic factors;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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