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Misallocation and manufacturing TFP in Colombia

Author

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  • Camacho, Adriana
  • Conover, Emily
  • Scrimgeour, Dean

Abstract

Following Hsieh and Klenow (2009) this paper studies productivity dispersion in Colombian industrial establishments using the Colombian Annual Manufacturing Survey (AMS) from 1982 to 1998. We consider how much a hypothetical removal of firm-level distortions would increase manufacturing productivity in Colombia and compare it with the United States. We find that such a reallocation would increase manufacturing Total Factor Productivity (TFP) in Colombia around 15% more than in the United States in our baseline calibration. We find that distortions have been increasing over time. Productivity gains are larger if we use Colombia’s higher estimated elasticity of output with respect to capital. Furthermore we show that TFP is positively correlated with exporting status, age, size, and location in the Oriental region and the capital of the country.

Suggested Citation

  • Camacho, Adriana & Conover, Emily & Scrimgeour, Dean, 2024. "Misallocation and manufacturing TFP in Colombia," LSE Research Online Documents on Economics 122533, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:122533
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    References listed on IDEAS

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    1. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitability enhancing reallocation: evidence from Colombia," Journal of Development Economics, Elsevier, vol. 75(2), pages 333-371, December.
    2. Adriana Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 389-410, August.
    3. Abhijit V. Banerjee & Benjamin Moll, 2010. "Why Does Misallocation Persist?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 189-206, January.
    4. Eslava, Marcela & Haltiwanger, John & Kugler, Adriana & Kugler, Maurice, 2004. "The effects of structural reforms on productivity and profitabality enhancing reallocation: evidence from Colombia," Discussion Paper Series In Economics And Econometrics 0408, Economics Division, School of Social Sciences, University of Southampton.
    5. Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2005. "Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms," Journal of International Economics, Elsevier, vol. 66(1), pages 75-105, May.
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    More about this item

    Keywords

    reallocating factors of production; Colombia; Total Factor Productivity; manufacturing; misallocation;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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