Gustavo Crespi

Determinants of Technical Efficiency in Small Firms

There is evidence that small firms are less productive than larger ones. This phenomenon could be explained by several factors. In this paper, using plant survey data and non-parametric deterministic frontier methodology, we explore what factors can explain the observed differences in technical efficiency. In the case of Chilean manufacturing firms, we found that efficiency is positively associated with the experience of workers, modernization of physical capital and innovation in products. In contrast, other variables such as outward orientation, owner education and participation in some public programs do not affect the efficiency of the firms.

Productivity, Exporting, and the Learning-by-Exporting Hypothesis: Direct Evidence from UK Firms

Case study evidence suggests that exporting firms learn from their clients. But econometric evidence, mostly using exporting and TFP growth, is mixed. We use a UK panel data set with firm-level information on exporting and productivity. Our innovation is that we also have direct data on the sources of learning (in this case about new technologies). Controlling for fixed effects we have two main findings. First, we find firms who exported in the past are more likely to then report that they learnt from buyers (relative to learning from other sources). Second, firms who had learned from buyers (more than they learnt from other sources) in the past are more likely to then have productivity growth. This suggests some support for the learning-by-exporting hypothesis.

New problems and opportunities for industrial development in Latin America

The paper considers the extent to which trade liberalization, de-regulation of economic activity, privatization of public assets and more careful management of macroeco-nomic aggregates, are affecting Latin America. The background, set in import substituting industrialization, has given way to transition towards a new productive structure and new methods of organization of manufacturing activity. Part of that is the relative rise of industries based on the processing of resources. Industrial labour productivity improved in the early 1990s after a long period of stagnation, which became very apparent in the 1980s, though the achievement of an 8% per annum rate, and much shedding of labour, has been insufficient to close the gap which exists with the US. The paper comments on the difficulties of understanding transition in the context of economic theory. (This abstract was borrowed from another version of this item.)

Multinational firms and productivity catching-up: the case of Chilean manufacturing

In this paper, we study Total Factor Productivity (TFP) catching-up using 20 years of plant-level data for Chilean manufacturing. This paper addresses two key issues: first, we analyse whether there is evidence that low-productivity plants experience higher TFP growth than those closer to the technology frontier. Second, we investigate the role of multinational plants in accelerating the catching-up process by non-frontier domestic plants. Our results show evidence of productivity catching-up, and that a larger presence of multinationals positively contributes to this phenomenon. These findings are consistent with the idea of technology spillovers from high to low-productivity plants or that a higher presence of multinationals increase competitiveness and productivity in domestic markets.

The Impact of Licenses on a “Late Starter” LDC: Chile in the 1990s

The acquisition of technology through licenses is a potentially important means of accelerating productivity growth, especially in “late starter” developing countries in the throes of “catch-up.” Yet the literature has tended to focus on the potential benefits to the seller, overlooking those to the purchaser (our own concern). We find that expenditures on licensing showed exceptionally high rates on return, on the order of twice those for investment in physical capital. This investment significantly improved firms performance and productivity in Chilean industry during the 1990s. We conclude that licensing can be an important instrument for speeding catch-up in less-developed countries.

The Productivity of UK Universities

There is increasing recognition in the UK and other OECD countries of the importance of scientific research in providing the foundations for both innovation and competitiveness. This has resulted in increased public funding for research in the UK and elsewhere. At the same time, there is a lack of systematic evidence on how such investments can lead to increasing levels of scientific output and, ultimately, to better economic performance. Much of the available literature concentrates on the effects of public funding of basic research on either firms innovative activities (see among others COHEN, NELSON AND WALSH [2002]; KLEVORICK, LEVIN, NELSON AND WINTER [1995]; JAFFE [1989]; NARIN, HAMILTON AND OLIVASTRO [1997]) or firm performance (Adams [1990]), bypassing the question of how to measure scientific output. The reasons for this are the difficulty of identifying a stable causal relationship between the resources spent on the science budget and intermediate scientific outputs. This difficulty originates from the dynamic nature of this relationship. There is a persistent and therefore recursive feedback between inputs and outputs, which is exacerbated by lack of appropriate information for analysis. Among the few studies that have attempted to address the problem, are ADAMS AND GRILICHES [1996] and JOHNES AND JOHNES [1995]. This study is based on and further develops Adams and Grilichess methodology.

PRODUCTIVITY AND FIRM HETEROGENEITY IN CHILE

We analyze productivity growth in Chilean manufacturing 1979-2000 using the newly available panel of establishments drawn from the Census of Manufacturing. We examine the contribution to productivity growth of ?internal? restructuring (such as new technology and organizational change among survivors) and ?external? restructuring (exit, entry and market share change). We find that (a) ?external restructuring? accounts for 52% of industry labour productivity growth and 57% of industry TFP growth; (b) much of the external restructuring effect comes from the closing down of poorly-performing plants due to import penetration, and (c) import penetration is also an important determinant of internal restructuring in the long term.

The Industrialization of Chile during Protectionism, 1940–82

The objective of this chapter is to present an evaluation of the process of industrialization of Chile during the period 1940–82. The concept of industrialization is understood in the broadest sense, including industrial development as well as institutional modernization and social transformation. During the four decades which elapsed from the beginning of the 1940s, the Chilean economy completed a cycle of its economic development and began a new phase. The cycle of the so-called ‘development from within’, which had begun with the 1930s crisis, culminated in 1973–74 with the breakdown of the democratic regime.1 Throughout the decade of the 1940s the industrial growth rate reached an average of 8 per cent a year but thereafter declined perceptibly (Munoz, 1995). For the entire period 1950–71, an annual growth rate of 5.4 per cent has been estimated, well below the Latin American average for this period which reached 6.7 per cent (Benavente et al. 1996, table 4).

Design and Evaluation of Fiscal Incentives for Business Innovation in Latin America: Lessons Learned After 20 years of Experimentation

This chapter presents the most important recent trends with regard to the design and evaluation of fiscal incentives for the support of business innovation in LAC. Several countries in the region have been experimenting with these policies since early 1990s, in many of these cases with technical and financial support from the Inter-American Development Bank. In contrast with the OECD countries, the LAC’s business innovation support framework is clearly biased toward direct transfers to the private sector. Just a few countries have more recently started to experiment with tax incentives. However, in comparison with the international best practices, the fiscal budgets allocated to these programs are rather meager. To some extent, business innovation policy in the region is still in its infancy. Despite this, many of these pilot programs have already been assessed and this chapter takes advantage of the existent wealth of studies in order to provide a qualitative meta-analysis of the most pioneer programs in operation since early 1990s. They main conclusions are rather straightforward: There is clear evidence of a positive impact on investments (input additionality). In other words, fiscal incentives have been effective at the moment of increasing firms’ investment in innovative projects and not only that they have been also effective in leveraging private resources for this investment. However, the studies also found that different financing mechanisms have varying impacts on different group of beneficiaries. Although it seems that the risks of crowding-out private investments are lower in the case of programs based on subsidized loans or tax incentives, matching grants seems to be more effective in the case of new innovators or at the moment of fostering linkages between firms and universities. An important policy recommendation from the different studies is that matching grants programs are a very powerful tool, which impacts might be maximized when they focus in these activities. With regard to output additionality, impacts also seem to be positive whenever enough time has elapsed since the support was approved. Indeed, the different studies that looked at output additionality suggests that positive impacts in labor productivity might be significant—in the range between 5 and 25 %—but that results start to show up only after three to five since the start of an innovation project. The chapter also indicates that the main considerations of design should be taken into consideration at the moment of increasing the efficiency of these programs and at the same time minimizing problems of moral hazard.

Rethinking Productive Development

Latin America and the Caribbean is a middle-income region. The typical country in the region has an income per capita about 25 percent above the typical country in the world, but 80 percent below the income per capita of an advanced country like the United States.1 The region’s relative position is declining: 50 years ago, it was much better off than it is today compared to the rest of the world (ROW), and despite recent strides, it has been unable to converge with respect to the United States (Figure 1.1). Why is the region so much poorer than the advanced countries in the world? Why is the region lagging behind while other parts of the world are catching up with the leaders? And most important, what can the region do about it?