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Management and misallocation in Mexico

Nicholas Bloom, Leonardo Iacovone, Mariana Pereira-López and John van Reenen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We argue that greater misallocation is a key driver of the worse management practices in Mexico compared to the US. These management practices are strongly associated with higher productivity, growth, trade, and innovation. One indicator of greater misallocation in Mexico is the weaker size-management relationship compared to the US, particularly in the highly distorted Mexican service sector. Second, the size-management relationship is weaker in smaller markets, measured by distance to the US for manufacturing firms and population density for service firms. Third, municipalities with weaker institutions, measured by contract enforcement, crime, and corruption, have a weaker size-management relation. These results are consistent with frictions lowering aggregate management quality and productivity.

Keywords: misallocation; management; performance; services; manufacturing; Mexico (search for similar items in EconPapers)
JEL-codes: D24 E22 F14 L25 O33 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2022-01-25
New Economics Papers: this item is included in nep-eff and nep-hrm
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http://eprints.lse.ac.uk/117752/ Open access version. (application/pdf)

Related works:
Working Paper: Management and misallocation in Mexico (2022) Downloads
Working Paper: Management and misallocation in Mexico (2022) Downloads
Working Paper: Management and Misallocation in Mexico (2022) Downloads
Working Paper: Management and Misallocation in Mexico (2022) Downloads
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