Productivity in Latin America. An analysis using a Cobb-Douglas function

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Published: Apr 1, 2025
Updated: 2025-04-01
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2025-04-01 (2)
DOI: https://doi.org/10.17163/ret.n29.2025.07
Keywords:
Total Factor Productivity, economic growth, panel data, Cobb-Douglas, Pooled Mean Group

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César Lenin Navarro-Chávez
Universidad Michoacana de San Nicolás de Hidalgo
https://orcid.org/0000-0002-4465-8117
René Augusto Marín-Leyva
Universidad Michoacana de San Nicolás de Hidalgo
https://orcid.org/0000-0002-4782-3798
Daniela Valenzuela-Carreño
Universidad Michoacana de San Nicolás de Hidalgo
https://orcid.org/0009-0001-5800-494X

Abstract

In Latin America, the limited growth of economic activity has been characterized by its strong correlation with low productivity, which is why the behavior of Total Factor Productivity (TFP) in this region is analyzed.  The objective of this research is to examine the role of labor (L), capital (K), and technological change (A) in the evolution of Total Factor Productivity (TFP) in Latin America during the period 1990-2019.  A panel data model is implemented using the "Pooled Mean Group" (PMG) estimator for fourteen economies over a period of 29 years.  The results show the existence of cross-sectional dependence and a unit root of order I(1).  A long-term relationship between the variables is presented, and it is found that labor (L), capital (K), and technological change (A) positively impact TFP.  It was found that, in the short term, capital (K) has a greater impact than technological change (A) on TFP; whereas, in the long term, it is technological change (A) that has the most influence.  The model shows an adjustment speed of 18%, which implies an estimated correction time of 5.5 years.  In conclusion, the work highlights the importance of strengthening innovation and technological development in the region to improve productivity and economic growth.

Article Details

Issue
Vol. 15 No. 29 (2025): (April-September)
Section
Miscellaneous Section
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