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Firm-level productivity in Latin America and the Caribbean

Lucas Figal Garone (), Paula A. López Villalba, Alessandro Maffioli and Christian Ruzzier ()

Research in Economics, 2020, vol. 74, issue 2, 186-192

Abstract: While the accumulation of factors of production, both physical and human capital, has helped Latin America and the Caribbean (LAC) to narrow the income gap with developed economies, aggregate productivity is still relatively low. Although there are numerous determinants of aggregate productivity, it is largely based on the underlying productivity of all firms in the economy. Using firm-level data from several waves of the World Bank Enterprise Survey and Chile's National Manufacturing Survey, we explore the ‘what’ question on productivity dispersion in LAC. We document three stylized facts: (i) there are significant differences in firm productivity within industries – the firm at the 90th percentile of the productivity distribution produces almost seven times as much output (using the same measured inputs) as the 10th percentile firm; (ii) productivity differences persist over time – regressing a firm's current productivity on its one-year lagged productivity yields an autoregressive coefficient of around 0.9; and (iii) most of the growth in aggregate productivity comes from improvements in the productivity of existing firms.

Keywords: Aggregate productivity; Firm-level productivity; TFP; Latin America and the Caribbean (search for similar items in EconPapers)
JEL-codes: D24 L20 M20 O30 O47 O54 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:74:y:2020:i:2:p:186-192

DOI: 10.1016/j.rie.2020.04.004

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