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On the Role of Productivity and Factor Accumulation in Economic Development in Latin America and the Caribbean

Author

Listed:
  • Christian Daude

    (OECD)

  • Eduardo Fernández-Arias

    (Inter-American Development Bank)

Abstract
This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The region’s development performance is assessed in contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. We find that total factor productivity is the predominant factor: low and slow productivity, as opposed to impediments to factor accumulation, is the key to understand Latin America’s low income relative to developed economies and its stagnation relative to other developing countries that are catching up. While policies easing factor accumulation would help improving productivity somewhat, for the most part, closing the productivity gap requires productivity-specific policies. Afin d’estimer les rôles respectifs joués par la productivité totale des facteurs et l’accumulation des facteurs de production sur la performance de développement économique de l’Amérique latine, cet article combine des exercices comptables de développement et de croissance avec la théorie économique. La performance de la région est évaluée en comparaison avec différents benchmarks issus à la fois de pays riches et de pays en développement d’autres régions. Les résultats montrent que la productivité totale des facteurs est l’élément prédominant pour comprendre le faible revenu de l’Amérique latine par rapport à celui des pays développés, et sa stagnation par rapport à d’autres pays en développement qui sont en train de les rattraper. L’explication repose ainsi sur la faible productivité dans les économies de la région, et sa lente croissance,, et non sur l’existence d’un quelconque obstacle à l’accumulation de facteurs. Même si les politiques publiques facilitant l’accumulation de facteurs pourraient dans une certaine mesure améliorer la productivité globale, l’important est de s’orienter vers des politiques publiques centrées spécifiquement sur la productivité, et ce afin de diminuer les écarts de performance entre l’Amérique latine et les pays développés.

Suggested Citation

  • Christian Daude & Eduardo Fernández-Arias, 2010. "On the Role of Productivity and Factor Accumulation in Economic Development in Latin America and the Caribbean," OECD Development Centre Working Papers 290, OECD Publishing.
    • Handle: RePEc:oec:devaaa:290-en
    DOI: 10.1787/5kmh5gpqtdjc-en
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    Keywords

    Amérique latine; croissance économique; development; développement; economic growth; Latin America; productivité totale des facteurs; total factor productivity;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • 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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