Productivity in Colombia: Looking at the main stylized facts and some new hypotheses

Abstract

"Total factor productivity (TFP) is thought to include the most important sources of growth for a country. TFP in Latin America and Colombia declined during the 1980s and 1990s, accounting for the poor performance in terms of COP growth during that period. This paper surveys the studies that explain the causes behind this outcome and presents new evidence related to the effects of labor market variables and innovation activities on TFP. Using time series the paper shows that a reduction in firing and hiring costs may have had positive impact on TFP growth. With a four digits ISIC panel data set of manufacturing sectors, the paper also shows that increasing worker benefits weaken incentives to innovate. Other determinants are also analyzed, including violence related indicators and human capital variables."