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Productivity and reallocation: evidence from ecuadorian firm-level data

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  • Ho, Anson T. Y.
  • Huynh, Kim P.
  • Jacho-Chávez, David T.

Abstract

Ecuador, a developing small open economy, serves as an important case study for aggregate productivity growth and input reallocation. Since little is known about the economic performance of Ecuador with its crisis and reforms between 1998 and 2007, this paper uses a comprehensive microdata set from Ecuador’s National Statistics and Census Institute to study Ecuadorian firm dynamics in that period. We find that the reallocation of factor inputs (2.6 percent) and technical efficiency growth (3.2 percent) on the intensive margin are the dominant sources of aggregate productivity growth. Net entry, as a channel of reallocation on the extensive margin, generally has minor effects (–0.1 percent) and contributes to productivity growth only in the later recovery period (2002–04).

Suggested Citation

  • Ho, Anson T. Y. & Huynh, Kim P. & Jacho-Chávez, David T., 2019. "Productivity and reallocation: evidence from ecuadorian firm-level data," LSE Research Online Documents on Economics 123228, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:123228
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    Keywords

    Aggregate productivity growth; factor reallocation;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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