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On The Evolution of TFP in Latin America

By Pedro Cavalcanti Ferreira (epge/fgv, Samuel De Abreu Pessôa (ibre/fgv and O A. Veloso (ibre/fgv


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. In this paper we show, however, that until the late seventies Latin American countries had high productivity levels relative to the United States. It is only after the late seventies that we observe a fast decrease of relative TFP in Latin America. We also show that the inclusion of human capital in the production function makes a crucial di¤erence in the TFP calculations for Latin America

Topics: Key Words, Latin America, Total Factor Productivity. JEL Classi\u85cation Code, O11, O47, O54. We wish to thank seminar participants at the Latin America Total Factor Productivity Puzzle at
Year: 2012
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