On the evolution of TFP in Latin America

Pedro Cavalcanti Ferreira, Samuel de Abreu Pessôa e Fernando Veloso

Due to several policy distortions, including import-substitution industrialization, widespread government intervention and both domestic and international competitive barriers, there has been a general presumption that Latin America has been much less productive than the leading economies in the last decades. Recent papers have provided evidence that is consistent with this hypothesis. In particular, Cole et al. (2005) found that average total factor productivity (TFP) in Latin America corresponded to roughly 50% of US productivity between 1950 and 2000. The authors also argued that competitive barriers may explain why TFP is low in Latin America relative to the United States.

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