Economic Reforms and Total Factor Productivity Growth in Latin America and the Caribbean (1950-95)
Economic Reforms and Total Factor Productivity Growth in Latin America and the Caribbean (1950-95)

Author: Pablo Fajnzylber

Publisher:

Published: 2016

Total Pages: 24

ISBN-13:

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On average, economic reforms in Latin America and the Caribbean have been associated with a 1.5 percent yearly increase in the growth rate of total factor productivity. But there are important differences across countries, and in some cases economic reforms have been associated with lower growth in total factor productivity.Fajnzylber and Lederman rely on a series of growth accounting exercises to determine whether the growth rate of total factor productivity (TFP) or the unexplained portion of GDP growth (after controlling for the accumulation of capital per worker) in 18 Latin American and Caribbean economies has benefited from economic reform. They use Sachs and Warner (1995) criteria to identify the years of economic reform. They apply growth decomposition analysis and econometric tests to determine whether TFP growth has been significantly higher during periods of economic reform.Although the growth decomposition analysis assumes that the capital share of output is constant across Latin American countries, the econometric estimates allow for cross-country differences. In ordinary least squares (OLS) regressions and seemingly unrelated regressions (SUR), two alternative dummy variables are used to control for the effects of business-cycle fluctuations on observed rates of TFP growth. In addition, the SUR regressions consider the possibility that Latin American economies face common shocks.Finally, panel regressions are based on five-year averages of the growth rates of GDP and capital per worker. The authors find that, on average, economic reforms have been associated with a 1.5 percent yearly increase in the rate of TFP growth. But there are important differences across countries and in some cases economic reforms have been associated with lower TFP growth.This paper - a product of the Poverty Reduction and Economic Management Sector Unit, Latin America and the Caribbean Region - is part of a larger effort in the Bank to undertake regional studies to shed light on policy-relevant issues.

Economic Growth in Latin America and the Caribbean
Economic Growth in Latin America and the Caribbean

Author: Norman Loayza

Publisher: World Bank Publications

Published: 2005-01-01

Total Pages: 169

ISBN-13: 0821360914

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Several countries in Latin America and the Caribbean are suffering severe economic downturns and the success of market-oriented reforms is being called into question. This report seeks to contribute to the debate by examining the nature of economic growth in the region. The aim is threefold: to describe the basic characteristics of growth; explain differences across countries and to forecast changes over the next decade.

Growth, Employment, and Equity
Growth, Employment, and Equity

Author: Barbara Stallings

Publisher: Rowman & Littlefield

Published: 2010-12-01

Total Pages: 271

ISBN-13: 0815798296

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A Brookings Institution Press and Economic Commission for Latin America and the Caribbean (ECLAC) publication In the last ten to fifteen years, the Latin American and Caribbean region has undergone the most significant transformation of economic policy since World War II. Through a series of structural reforms, an increasing number of countries have moved from closed, state-dominated economies to ones that are more market oriented and open to the rest of the world. Policymakers expected that these changes, in conjunction with lower rates of inflation and increased spending in the social area, would speed up economic growth, increase productivity, and lead to the creation of more jobs and greater equality. Have those expectations been fulfilled? Analyzing the impact of the reforms in nine countries (Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Jamaica, Mexico, Peru), this study provides a detailed picture of progress to date. At the overall regional level, the book suggests, the reforms have had a surprisingly small impact: a small positive impact on investment and growth, and a small negative impact on employment and income distribution. But at the country, sectoral, and microeconomic levels, it finds evidence of strong effects, with some units doing very well and others falling behind.

Economic Growth in Latin America
Economic Growth in Latin America

Author: Mr.Jose De Gregorio

Publisher: International Monetary Fund

Published: 1991-07-01

Total Pages: 57

ISBN-13: 1451959753

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This paper studies growth determinants in 12 Latin American countries during the period 1950-85. In a simple growth accounting framework, the share of labor in income is found to be lower in the sample group than in developed countries, while factor productivity growth accounts for a larger proportion of growth in the fastest growing countries in the sample. Using panel data, macroeconomic stability is found to play, in addition to investment (physical and human), a crucial role in growth. To a lesser extent, growth is negatively correlated with government consumption and political instability. The terms of trade appear to have no significant effect on growth.

Understanding the Income and Efficiency Gap in Latin America and the Caribbean
Understanding the Income and Efficiency Gap in Latin America and the Caribbean

Author: Jorge Thompson Araujo

Publisher: World Bank Publications

Published: 2016-03-28

Total Pages: 257

ISBN-13: 1464804516

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The countries of the Latin America and Caribbean region (LAC), like other emerging economies, have benefited from a decade of remarkable growth and some income per capita convergence towards the United States and other industrialized countries. However, even nearly ten years of solid growth in the first decade of the 21st century could not guarantee that LAC would move on to a sustained long-term income convergence path. In fact, despite this recent progress, LAC still faces a significant per capita income gap with the developed world. The papers in this volume contribute to the ongoing debate on the reasons for this persistent income gap and the potential drivers of convergence, and propose some broad avenues for reform. This volume presents new macro-, sectoral-, and micro-level evidence that: (i) differences in total factor productivity (TFP), or efficiency in using the production factors, such as physical and human capital, explain a large part of LAC's persistent income gap; and (ii) resource misallocation is the main factor behind LAC's large efficiency gap. At the same time, the findings of this volume indicate there is significant room for further economic growth gains from technology adoption and innovation more broadly. In fact, the quality of the available technology in LAC is low, and there is very little innovation. Although firms can use innovation to reach productivity at the global productivity frontier, weak institutions reduce incentives to innovate. This volume also proposes that the main priorities for improving resource allocation and the incentives to innovate include: (i) enhancing market competition in key network industries (transport, financial, telecommunications, logistics, communication and distribution services); (ii) increasing labor market flexibility (including skill-mismatches and social barriers); (iii) removing informational frictions (including complex tax regimes and credit rationing); (iv) strengthening property rights; and (v) improving the rule of law.

Vanishing Growth in Latin America
Vanishing Growth in Latin America

Author: Andrés Solimano

Publisher: Edward Elgar Publishing

Published: 2006

Total Pages: 270

ISBN-13:

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Economic growth in Latin America and the rise of material welfare has lagged behind that of more dynamic areas of the world economy. This book aims to determine the role of economic reforms, external conditions, factor accumulation, income inequality, political instability and productivity in explaining GDP increases.