nep-lam New Economics Papers
on Central and South America
Issue of 2005‒02‒13
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Growth Accelerations By Hausmann, Ricardo; Pritchett, Lant; Rodrik, Dani
  2. The Effects of Structural Reforms on Productivity- and Profitability-Enhancing Reallocation: Evidence from Colombia By Eslava, Marcela; Haltiwanger Jr, John C; Kugler, Adriana; Kugler, Maurice
  3. Economic and Political Liberalizations By Giavazzi, Francesco; Tabellini, Guido

  1. By: Hausmann, Ricardo; Pritchett, Lant; Rodrik, Dani
    Abstract: Unlike most cross-country growth analyses, we focus on turning points in growth performance. We look for instances of rapid acceleration in economic growth that are sustained for at least eight years and identify more than 80 such episodes since the 1950s. Growth accelerations tend to be correlated with increases in investment and trade, and with real exchange rate depreciations. Political-regime changes are statistically significant predictors of growth accelerations. External shocks tend to produce growth accelerations that eventually fizzle out, while economic reform is a statistically significant predictor of growth accelerations that are sustained. Growth accelerations tend to be highly upredictable: the vast majority of growth accelerations are unrelated to standard determinants and most instances of economic reform do not produce growth accelerations.
    Keywords: economic growth; economic reform
    JEL: O0 O50
    Date: 2004–08
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:4538&r=lam
  2. By: Eslava, Marcela; Haltiwanger Jr, John C; Kugler, Adriana; Kugler, Maurice
    Abstract: Estimates for the US suggest that at least in some sectors productivity-enhancing reallocation is the dominant factor in accounting for productivity growth. An open question, particularly relevant for developing countries, is whether reallocation is always productivity enhancing. It may be that imperfect competition or other barriers to competitive environments imply that the reallocation process is not fully efficient in these countries. Using a unique plant-level longitudinal dataset for Colombia for the period 1982-98, we explore these issues by examining the interaction between market allocation, and productivity and profitability. Moreover, given the important trade, labour and financial market reforms in Colombia during the early 1990s, we explore whether and how the contribution of reallocation changed over the period of study. Our data permit measurement of plant-level quantities and prices. Taking advantage of the rich structure of our price data, we propose a sequential methodology to estimate productivity and demand shocks at the plant level. First, we estimate total factor productivity (TFP) with plant-level physical output data, where we use downstream demand to instrument inputs. We then turn to estimating demand shocks and mark-ups with plant-level price data, using TFP to instrument for output in the inverse demand equation. We examine the evolution of the distributions of TFP and demand shocks in response to the market reforms in the 1990s. We find that market reforms are associated with rising overall productivity that is largely driven by reallocation away from low- and towards high-productivity businesses. In addition, we find that the allocation of activity across businesses is less driven by demand factors after reforms. We find that the increase in aggregate productivity post-reform is entirely accounted for by the improved allocation of activity.
    Keywords: productivity and demand decompositions; structural reforms; TFP measurement
    JEL: F43 L16 O14 O40
    Date: 2004–08
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:4569&r=lam
  3. By: Giavazzi, Francesco; Tabellini, Guido
    Abstract: This Paper studies empirically the effects of and the interactions amongst economic and political liberalizations. Economic liberalizations are measured by a widely used indicator that captures the scope of the market in the economy, and in particular of policies towards freer international trade (cf. Sachs and Werner, 1995; Wacziarg and Welch, 2003). Political liberalizations correspond to the event of becoming a democracy. Using a difference-in-difference estimation, we ask what are the effects of liberalizations on economic performance, on macroeconomic policy and on structural policies. The main results concern the quantitative relevance of the feedback and interaction effects between the two kinds of reforms. First, we find positive feedback effects between economic and political reforms. The timing of events indicates that causality is more likely to run from political to economic liberalizations, rather than vice versa, but we cannot rule out feedback effects in both directions. Second, the sequence of reforms matters. Countries that first liberalize and then become democracies do much better than countries that pursue the opposite sequence, in almost all dimensions.
    Keywords: democracy; development; economic reform; growth
    JEL: O10 O11
    Date: 2004–08
    URL: http://d.repec.org/n?u=RePEc:cpr:ceprdp:4579&r=lam

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