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Institutional quality and total factor productivity in Latin America and the Caribbean : exploring the unobservable through factor analysis

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  • Alejandro Quijada

Abstract

This document determines, for a sample of Latin American countries, to what extent short-term variations in total factor productivity (TFP) are infl uenced by changes in institutional quality. Our empirical strategy is two-folded. First, we use statis-tical tools borrowed from factor analysis to extract from observable outcome indicators, unobservable common factors associated to TFP and institutional quality. Second, panel estimations are performed, linking the latent elements of aggregate factor pro-ductivity to the underlying common factors of in-stitutional quality. Results are appealing: economic liberty is positively related to short-term total factor productivity

Suggested Citation

  • Alejandro Quijada, 2007. "Institutional quality and total factor productivity in Latin America and the Caribbean : exploring the unobservable through factor analysis," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 25(53), pages 66-119, January.
    • Handle: RePEc:col:000107:004632
    DOI: 10.32468/Espe.5302
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    More about this item

    Keywords

    institutions; total factor productivity; factor analysis; Latin America.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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