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Downsizing and productivity gains in the public and private sectors of Colombia

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  • Rama, Martin
  • Newman, Constance

Abstract

Public sector restructuring, including labor downsizing, has been one of the main areas of policy activism in developing countries, and transition economies. But little is known about its actual effects. The authors use panel data on Colombian enterprises spanning more than one decade, to assess the impact on several productivity indicators. The results suggest that the productivity gains from downsizing, are larger in state-owned enterprises than in private enterprises. While the increase in value added per worker is similar in both cases, state-owned enterprises experience an increase in total value added, and in value added per unit of capital, whereas both indicators decline in private enterprises. The difference, which could simply reflect the larger extent of initial inefficiency in state-owned enterprises, does not appear to depend on the degree of competition in product markets.

Suggested Citation

  • Rama, Martin & Newman, Constance, 2002. "Downsizing and productivity gains in the public and private sectors of Colombia," Policy Research Working Paper Series 2770, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2770
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    References listed on IDEAS

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    1. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, July.
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    4. Baily, Martin Neil & Bartelsman, Eric J & Haltiwanger, John, 1996. "Downsizing and Productivity Growth: Myth or Reality?," Small Business Economics, Springer, vol. 8(4), pages 259-278, August.
    5. Haltiwanger, John & Singh, Manisha, 1999. "Cross-Country Evidence on Public Sector Retrenchment," The World Bank Economic Review, World Bank, vol. 13(1), pages 23-66, January.
    6. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
    7. Espahbodi, Reza & John, Teresa A & Vasudevan, Gopala, 2000. "The Effects of Downsizing on Operating Performance," Review of Quantitative Finance and Accounting, Springer, vol. 15(2), pages 107-126, September.
    8. Carrasquilla, Alberto, 1996. "The changing role of the public sector: The Colombian case," The Quarterly Review of Economics and Finance, Elsevier, vol. 36(2), pages 167-181.
    9. Ruppert, Elizabeth, 1999. "The Algerian Retrenchment System: A Financial and Economic Evaluation," The World Bank Economic Review, World Bank, vol. 13(1), pages 155-183, January.
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    1. repec:idb:brikps:66858 is not listed on IDEAS
    2. Guido Friebel & Gerard McCullough & Laura Padilla Angulo, 2014. "Patterns of Restructuring The US Class 1 Railroads from 1984 to 2004," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 115-135, January.
    3. Saxena, Richa, 2006. "Methods for the Study of Downsizing: A Review," IIMA Working Papers WP2006-12-01, Indian Institute of Management Ahmedabad, Research and Publication Department.

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