"TFP Growth in Argentina during the 1990's: A Stylized Fact?" .

ARIEL COREMBERG

UNLP

Jornada; Novenas Jornadas de Economía Monetaria e Internacional; 2004

Depto Economía UNLP

The present work analyses the hypothesis that productivity growth in theArgentine economy during the 1990´s was merely apparent, a fact which may partiallyexplain the later crisis in the convertibility exchange system.After summarizing briefly major considerations from growth theory about theinterpretation of the Total Factor Productivity indicator or TFP, the methodology usedfor estimating productivity is later discussed.The TFP of the Argentine economy is estimated taking into account therecommendations of recent economic literature, especially OECD (2001a), as regardsthe consistent and exhaustive estimation of factor contribution to growth and theavisable use of optimal physical volume indices able to capture the effect of thechanges of relative prices on factors and their components, as well as on GDP subaggregates.The average growth of Solow´s residual or TFP in Argentina was slightlynegative in this decade. However, the trend appears positive if measured throughfixed-base indices corrected by the "quality" of productive factors, and it has a higherabsolute value when the latter are measured in undifferentiated terms.The negative trend of the TFP becomes more pronounced when capitalservices are corrected by aggregate capacity utilization.Considering the relevance and dynamism of capital stock in the growth process,the proper measure of its degree of heterogeneity, the type of weights, and indexnumbersapplied for measuring its contribution to output become thus more important.Considering the above results, evidences would suggest that noproductivity gains in Solow´s sense occurred in Argentina during the nineties.TFP growth in the Argentine economy during this decade would have beenapparent in its several senses: potential output, competitiveness, prospectivevalue of wealth, and standard of living.The pattern of economic growth would have an extensive character,based on capital accumulation rather than on "neutral technological progress ornon-pecuniary externalities".