Total factor productivity growth in Costa Rica and macroeconomic instability

Revista de Ciencias Económicas

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Title Total factor productivity growth in Costa Rica and macroeconomic instability
Crecimiento de la productividad total de los factores en Costa Rica e inestabilidad macroeconómica
Creator Robles, Edgar A
Description This paper uses the growth accounting methodology, called Two- Deflator Approach, to estimate Total Factor Productivity (TFP) in Costa Rica between 1960 and 2019. The results indicate that 14% of economic growth is explained by the growth of TFP. The rest of economic growth is associated with contributions of capital (52%) and labor (34%), which have been positive during all decades of this period.
Regarding the contribution of labor, its contribution to economic growth has been due to the quantity and not the quality of the workforce, except for the first (1960-1969) and last (2010-2019) periods, where quality contributed positively to economic growth. In terms of changes, the results show that 69% of the change in the growth rate during the period is explained by changes in TFP; the remaining 31% is explained by changes in the contributions of the factors of production (labor and capital).
Once the TFP is calculated, a GARCH model is used to estimate the relationship between the macroeconomic instability and TFP growth. Thus, evidence was found that TFP growth in Costa Rica is negatively affected by high inflation. Moreover, TFP growth benefits from higher openness to international trade, measured by the sum of imports and exports to GDP, and TFP is harmed when there is greater volatility of financial deepening, measured by the ratio from M1 or M2 to GDP.
El presente trabajo utiliza la metodología de contabilidad de crecimiento, llamada Two-Deflator Approach, para estimar la productividad total de los factores (PTF) en Costa Rica entre 1960 y 2019. Los resultados indican que el 14 % del crecimiento económico es explicado por el crecimiento de la PTF. El resto del crecimiento económico se asocia a las contribuciones del capital (52%) y del trabajo (34%), las cuales han sido positivas durante todas las décadas de este periodo. En cuanto a la contribución del trabajo, su aporte al crecimiento económico ha sido por la cantidad y no por la calidad de la mano de obra, con excepción del primer (1960-1969) y último periodo (2010-2019) en donde la calidad aportó positivamente al crecimiento económico. En términos de cambios, los resultados muestran que el 69% del cambio en la tasa de crecimiento durante el periodo está explicado por cambios en la PTF; el restante 31 % se explica por cambios en las contribuciones de los factores de producción (trabajo y capital).
Una vez estimada la PTF, se utiliza un modelo GARCH para estimar la relación entre la instabilidad macroeconómica y el crecimiento de la PTF. Así, se encontró evidencia de que el crecimiento de la PTF en Costa Rica se ve afectado negativamente por inflaciones altas. Por su parte, el crecimiento de la PTF se beneficia de un mayor crecimiento de la apertura comercial, medida por la suma de importaciones y exportaciones a PIB, y se perjudica cuando existe una mayor volatilidad de la profundización financiera, medida por la razón de M1 o M2 al PIB.
Publisher Universidad de Costa Rica
Date 2021-06-30
Type info:eu-repo/semantics/article
Format application/pdf
Source Revista de Ciencias Económicas; Vol 39 No 1 (2021): Revista de Ciencias Económicas: (January - June); 1-24
Revista de Ciencias Económicas; Vol. 39 Núm. 1 (2021): Revista de Ciencias Económicas: (enero - junio); 1-24
Language spa
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Rights Derechos de autor 2021 Edgar A Robles

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