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1. Productivity, Structural Change, and Latin American Development

Author:
Carlos Gustavo Machicado, Felix Rioja, and Antonio Saravia
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
We calibrate a simple neoclassical model of structural transformation to a set of Latin American countries and show that slow growth in agricultural productivity can substantially delay the development process and result in significant differences in per capita incomes. Some of our results indicate that low agricultural productivity delayed the beginning of the industrialization process in Paraguay and Bolivia by about 100 years compared to the leader of the group, Chile. The development process can be accelerated, however, by increasing productivity in the non-agricultural sector. In fact, in the long run, it is non-agricultural productivity what determines the speed of convergence. Improvements in non-agricultural productivity between 20% to over 100% would be required for the other Latin American countries in our set to significantly close the income gap with Chile by the end of the century.
Topic:
Agriculture, Manufacturing, Economic Development, and Productivity
Political Geography:
Latin America

2. Technological Progress and Productivity in the Quinoa Sector

Author:
Juan Cristóbal Birbuet and Carlos Gustavo Machicado
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The main objective of this case study is to analyze the effect that a significant technological innovation in quinoa processing has had on the productivity of companies devoted to this activity and the impact of such an innovation on the growth and organization of the quinoa cluster in Bolivia, and its possible effects on the future. The study will explain how the boost engendered by technological innovation in quinoa processing has triggered a series of events that have allowed the establishment of an ambitious development program. The sector’s main companies and producer associations are part of this program, which is called the “Quinoa Alliance.” The program has become a unique opportunity for agro-industrial development in the Bolivian Altiplano, so far characterized by subsistence agriculture.
Topic:
Science and Technology, Economic Growth, Productivity, and Quinoa
Political Geography:
South America and Bolivia

3. Understanding Productivity Levels, Dispersion and Growth in the Leather Shoe Industry: Effects of Size and Informality

Author:
Juan Cristóbal Birbuet and Carlos Gustavo Machicado
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
In this case study performed on the industrial sub-sector of manufacture of leather shoes in Bolivia, we use the Hsieh and Klenow model (2008) to determine the differences between productivity of larger and formal companies and productivity of smaller and informal companies. Our results reveal that there are not many differences in terms of productivity among these types of companies. We think that informality is indeed the most important factor that contributes to this phenomenon. Apparently, the decrease in costs associated with informality compensates to some extend the economies of scale of formal companies with bigger dimensions and better technology. A notable fact in the shoe manufacturing industry is that it had experienced an atomization process in the last years. This trend is the consequence of a progressive creation of many small informal companies instead of the consolidation of this industry in medium and large formal companies. In a way, informality has contributed to this process. First, because it allows the survival of less productive companies that if they were not informal, they would have to bear costs that would not allow them to continue in business. Second, because informality creates strong incentives for employees to start their own business. In the other hand, many costs associated to formality discourage legally operating companies to employ more people, raise capital and growth.
Topic:
Economy, Industry, Productivity, and Informal Economy
Political Geography:
South America and Bolivia

4. Informality and Productivity in Bolivia: A Gender Differentiated Empirical Analysis

Author:
Lykke E. Andersen and Beatriz Muriel
Publication Date:
07-2007
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This report analyzes gender differences in informality and productivity in urban Bolivia. Rural Bolivia is excluded from the analysis for three reasons: 1) informality in rural areas is close to 100% for both men and women2 , 2) farming is a family business and it is impossible to tell if one family member is more productive than another, and 3) data on productivity and profitability is too unreliable in rural areas. The urban labor market in Bolivia can be divided into 4 main sectors: 1) the public sector, 2) the formal private sector, 3) self-employed informals, and 4) informal workers. Although incomes are generally higher in the public sector and in the formal private sector, there is a strong preference in Bolivia for being informally self-employed. Two thirds of both men and women in urban areas respond that they would prefer to be self-employed rather than a salaried employee,3 and few see any advantage of becoming formal under the current institutional set-up.4 Currently, half of all economically active women in urban areas are informally selfemployed, while this is the case for only one third of men. This implies that women are actually closer to the desired state than men, according to their own preferences. The real problem for women is not that they are informally self-employed, but rather that the profitability of their informal enterprises is low. On average, monthly profits of female micro-entrepreneurs is about 40% lower than those of male micro-entrepreneurs.5 This report uses quantitative information from about 600 micro and small enterprises to break down and understand this gender gap in profitability, and the results show that almost the whole gap is due to the fact that women operate their businesses on a much smaller scale (with less productive capital and fewer employees) than men. Why do female entrepreneurs operate on a smaller scale? One partial explanation is that they do not want to grow, because the business then would loose some of the features that make a micro-business particularly attractive for women (not to depend on others, to be able to care for children simultaneously, flexible working hours, and daily revenues). When asked about what they consider the ideal number of employees for their business five years into the future, the average for women is 6.9 compared to 9.2 for men. Single women are generally a bit more ambitious than married or cohabiting women (the first would on average like 5.3 additional employees, whereas the latter only wants 4.2 extra employees),6 which suggests that family obligations may be one of the reasons why women prefer to keep their businesses at a relatively small scale.
Topic:
Economy, Productivity, Gender, and Informality
Political Geography:
South America and Bolivia

5. To aid or not to aid: Foreign aid and producity in cross-country regressions

Author:
Pablo Selaya
Publication Date:
11-2005
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
The paper reexamines empirically the robustness of competing theories of foreign aid e§ectiveness. By shifting the focus from the e§ects of aid on income to to e§ects of aid on productivity, it is possible to put to test 3 existing theories of foreign aid e§ectiveness. The results provide support for the hypotheses that (i) aid has a positive e§ect in fostering growth of average productivity, (ii) aid doesnít operate with diminishing returns, and (iii) the magnitude of the total e§ect depends on climate-related circumstances. The results support the policy recommendation previously made in the literature to seriously reconsider the conditionality rule for foreign aid disbursements.
Topic:
Development, Foreign Aid, Productivity, and Income
Political Geography:
Global Focus

6. What Makes a Difference in Achieving Higher Labor Productivity? The Case of Low-Income Countries in Latin America

Author:
Osvaldo Nina
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper uses firm level surveys from Ecuador, Guatemala, Honduras and Nicaragua to estimate the determinants of labor productivity. This study started out with the hypothesis that the adverse external business conditions that firms in poor Latin American countries face, may be an important explication of the generally low levels of productivity. However, the empirical results, based on the survey of more than 1300 businesses, do not confirm this hypothesis. Compared to all the variables that are under the firms control, such as capital intensity, energy use, and worker skills, the external business environment (macroeconomic instability and labor regulations) has very little impact on productivity.
Topic:
Development, Economics, Labor Issues, Productivity, and Income
Political Geography:
Latin America, Nicaragua, Honduras, Guatemala, and Ecuador