Productivity determinants in the construction sector in emerging country: New evidence from Ecuadorian firms

Segundo Camino‐Mogro and Natalia Bermudez‐Barrezueta
Authors registered in the RePEc Author Service: Segundo Camino-Mogro and Natalia Bermúdez Barrezueta

Review of Development Economics, 2021, vol. 25, issue 4, 2391-2413

Abstract: The construction sector is one of the most important sectors for economic development due, among other reasons, to the productive chains that it generates. This paper presents an analysis of the determinants of the total factor productivity (TFP) in the Ecuadorian construction sector during the period 2007–2018. In the first stage, we estimate a production function using the Wooldridge (Economics Letters, 2009, 104, 112–114) estimator to correct the simultaneous determination of inputs and firm unobserved productivity. In the second stage, we analyze the main determinants of TFP. These determinants are classified into four groups: internal, international trade, financial constraints, and external characteristics. Our results suggest that firm age is positively related with TFP but negatively related with TFP growth. Similarly, the fact of being a family firm is negatively related with TFP, but size is positively related with TFP and its growth across the construction subsectors. In addition, we find that access to debt and credit is positively related with productivity, but less‐competitive environment is negatively related with productivity. Finally, our results suggest that TFP and its growth are pro‐cyclical with respect to the gross domestic product. Our results have several managerial implications that are discussed in this article.

Date: 2021
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