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Competitiveness and Growth in LAC: The Chilean Case

Competitiveness and Growth in LAC: The Chilean Case. Comments to:. Juan Blyde, IDB. Much improved version. - Much better organization. - Clarity of the ideas. - Better definition of variables, tests, procedures, etc. - Arguments and conclusions are more in line with the evidence presented.

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Competitiveness and Growth in LAC: The Chilean Case

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  1. Competitiveness and Growth in LAC: The Chilean Case Comments to: Juan Blyde, IDB

  2. Much improved version - Much better organization - Clarity of the ideas - Better definition of variables, tests, procedures, etc. - Arguments and conclusions are more in line with the evidence presented - More clarity about which constraints are binding and which are not

  3. Good methodological aspects - Fairly large use of microeconomic data - Extensive use of Rajan and Zingales type of exercises - Effort to observe prices - Consistent benchmarking comparisons

  4. No equal treatment of potential constraints

  5. No equal treatment of potential constraints Percentile Rank (0-100) Ease of Doing Business Rank (Doing Business, 2006) 84 Control of Corruption (WEF-GCR) 88 Property Rights (WEF-GCR) 76 Flexibility of labor regulation (Djankov et al) 56

  6. No equal treatment of potential constraints Percentile Rank (0-100) Ease of Doing Business Rank (Doing Business, 2006) 84 Control of Corruption (WEF-GCR) 88 Property Rights (WEF-GCR) 76 Flexibility of labor regulation (Djankov et al) 56 Enforcing contracts (Doing Business, 2006) 58 Closing a business (Doing Business, 2006) 39

  7. On Labor Regulation - The effect of labor regulations on employment growth: potential problems of endogeneity. Also potential problems of misspecification. Check on Hallward-Driemeier and Pages (2007) - Labor regulations should have negative effects particularly on industries with higher liquidity requirements (Bennett, 2006). Possibility to do a Rajan-Zingales type of analysis

  8. TFP and Self-Discovery - After 1997, the economy slowed down due to a combination of a negative contribution of labor growth and a much smaller growth in TFP - There is not an explicit effort in the paper to address these facts - The paper acknowledges that Chile is poorly located in the product space -> the current opportunities for structural transformation are limited • One possibility: Long process of trade liberalization -> efficiency gains from a better re-allocation of resources. Consolidation of the gains from early and late liberalizations explains growth of TFP in the 1990s The efficiency gains have been already realized. There is little space for factor productivity to continue growing in this way -> TFP slowed down Further (sustained) gains in productivity require a process of structural transformation that is only incipient -> TFP remains low

  9. Slow TFP - Has the paper exhausted all the possible factors behind the slow TFP?

  10. Nice paper!

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