Latin America and the Caribbean’s Productivity: The Role of Pro-Market Policies, Institutions, Infrastructure, and Natural Resource Endowments

Néstor Le Clech () and Juan Carlos Guevara-Pérez
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Juan Carlos Guevara-Pérez: Faculty of Economics and Business, University of Zaragoza, 50005 Zaragoza, Spain

Economies, 2023, vol. 11, issue 5, 1-21

Abstract: This paper examines the role played by pro-market policies, institutions, natural resources, and infrastructure on the total factor productivity (TFP) of twenty Latin American and Caribbean countries over the period 2000–2018. In estimating the TFP, we use the Färe-Primont index based on DEA. We have verified cointegration and estimated the long-run parameters by the grouped-mean FMOLS estimator. For measuring the impact of institutions, natural resources, and infrastructure, we have used the Productive Capacity Indexes of UNCTAD. We found a positive effect of all these variables on the TFP. Natural resources and energy play the most important role. Followed by information and communication technology and institutions quality. Transport infrastructure has played a minor role. The pro-market policies have been measured by the Fraser Institute indexes. We verified the positive impact of pro-market policies in the area of international trade and financial openness through six different variables. Finally, we considered three areas to measure the impact of domestic regulations and policies; credit, labor and business. We could verify a positive impact of credit and business pro-market policies, but we did not get statistically significant results from the labor regulations index.

Keywords: Latin America and the Caribbean (LAC); total factor productivity (TFP); Data Envelopment Analysis (DEA); Färe-Primont index (FPI); pro-market policies effects; economic freedom and productivity (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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