Growing like Spain: 1995-2007
Manuel Garc ́ıa-Santana Enrique Moral-Benito
Universit ́e Libre de Bruxelles (ECARES) Banco de Espan ̃a
Josep Pijoan-Mas Roberto Ramos CEMFI and CEPR Banco de Espan ̃a
February 13, 2015
Abstract
Spanish GDP grew at an average rate of 3.5% per year during the economic expansion of 1995-2007, which was significantly above the EU average of 2.2%. However, this growth was based on factor accumulation rather than productivity gains. In particular, TFP fell over the period at an annual rate of 0.7%, while it increased at 0.4% per year in the EU and 0.7% per year in the US. Why did Spain fail to benefit from the growth of the technological frontier? In this paper, we argue that deterioration in the allocative efficiency of productive factors across firms is at the root of the low rate of TFP growth observed in Spain. In particular, using administrative data of firms we show that within-sector misallocation of production factors across firms increased substantially over the period in all industries, with most of the effects coming from inefficient capital and labor mix rather than inefficient size. We find that absent such deterioration, average TFP growth would have been around 0.8% per year, in line with the growth of the technological frontier. Finally, we provide empirical evidence that differences in the influence of the public sector across industries, and the role of young and small firms are potential sources of this deterioration in allocative efficiency. In contrast, other characteristics such as skill intensity, innovative content, or financial dependence are unrelated to changes in allocative efficiency.
http://articulosclaves.blogspot.com.es/2015/05/acabar-con-la-corrupcion-un-imperativo.html
Universit ́e Libre de Bruxelles (ECARES) Banco de Espan ̃a
Josep Pijoan-Mas Roberto Ramos CEMFI and CEPR Banco de Espan ̃a
February 13, 2015
Abstract
Spanish GDP grew at an average rate of 3.5% per year during the economic expansion of 1995-2007, which was significantly above the EU average of 2.2%. However, this growth was based on factor accumulation rather than productivity gains. In particular, TFP fell over the period at an annual rate of 0.7%, while it increased at 0.4% per year in the EU and 0.7% per year in the US. Why did Spain fail to benefit from the growth of the technological frontier? In this paper, we argue that deterioration in the allocative efficiency of productive factors across firms is at the root of the low rate of TFP growth observed in Spain. In particular, using administrative data of firms we show that within-sector misallocation of production factors across firms increased substantially over the period in all industries, with most of the effects coming from inefficient capital and labor mix rather than inefficient size. We find that absent such deterioration, average TFP growth would have been around 0.8% per year, in line with the growth of the technological frontier. Finally, we provide empirical evidence that differences in the influence of the public sector across industries, and the role of young and small firms are potential sources of this deterioration in allocative efficiency. In contrast, other characteristics such as skill intensity, innovative content, or financial dependence are unrelated to changes in allocative efficiency.
The 1994-2007 expansion was the longest in Spanish history (see Berge and Jorda 2013). GDP grew
at an average 3.5% per year, which compares very favourably to the EU average of 2.2% over the same
period.1 However, Spanish growth during this expansion was based on factor accumulation rather
than productivity gains. In particular, annual TFP growth was -0.7%, which is low in comparison to
other developed economies such as the US or EU. Such a dismal performance of productivity growth
is surprising for a country that is so well integrated in a trade and monetary union with some of the
World technology leaders. Did Spain fail to keep up with the technological frontier?
In this paper, we argue that the source of negative TFP growth has been the increase in the within-sector misallocation of production factors across firms. We use a large administrative data set of Spanish firms to compute several measures of allocative efficiency for every year between 1995 and 2007. In particular, we compute the potential TFP gains due to factor reallocation as Hsieh and Klenow (2009) and the Olley and Pakes (1996) covariances. All measures show a severe deterioration of allocative efficiency over the period. Furthermore, we find the phenomenon to be present in all sectors of activity, which casts doubt on the widespread view that specialization in low productivity sectors such as construction was the main force behind Spanish low TFP growth. We thus argue that allocative efficiency of resources across firms is at the root of the low rates of TFP growth observed in Spain. Our results are very stark: had the level of within-sector allocative efficiency remained constant, TFP growth would have been around 0.8% per year. Therefore, our conclusion is that Spain did not fail to keep up with the technological frontier. Aggregate productivity stagnated because of the economy increasingly allocated capital and labor in the wrong place across firms within each industry.2
The deterioration of factor allocation across firms during an economic expansion is arguably a
singular experience in Spain......
Informe completo en enlace...
https://www.cemfi.es/~pijoan/Work_in_Progress_files/mis_jan_2015-v03.pdf
Otros articulos
In this paper, we argue that the source of negative TFP growth has been the increase in the within-sector misallocation of production factors across firms. We use a large administrative data set of Spanish firms to compute several measures of allocative efficiency for every year between 1995 and 2007. In particular, we compute the potential TFP gains due to factor reallocation as Hsieh and Klenow (2009) and the Olley and Pakes (1996) covariances. All measures show a severe deterioration of allocative efficiency over the period. Furthermore, we find the phenomenon to be present in all sectors of activity, which casts doubt on the widespread view that specialization in low productivity sectors such as construction was the main force behind Spanish low TFP growth. We thus argue that allocative efficiency of resources across firms is at the root of the low rates of TFP growth observed in Spain. Our results are very stark: had the level of within-sector allocative efficiency remained constant, TFP growth would have been around 0.8% per year. Therefore, our conclusion is that Spain did not fail to keep up with the technological frontier. Aggregate productivity stagnated because of the economy increasingly allocated capital and labor in the wrong place across firms within each industry.2
The deterioration of factor allocation across firms during an economic expansion is arguably a
singular experience in Spain......
En el documento 'Growing like Spain: 1995-2007' varios economistas señalan que España creció de medio un 3,5% entre esos años, una media superior al 2,2% que se registró en la UE. Sin embargo, este crecimiento estuvo basado en la acumulación de factores más que en las ganancias de productividad. El crecimiento de la población y el endeudamiento permitió que la economía creciera en tamaño pero no en eficiencia.
Es más, durante este periodo, la PTF (Productividad Total de los Factores) cayó un 0,7% al año. Es decir, cada vez producíamos más pero necesitábamos más recursos (factor trabajo y capital), España era cada año menos eficiente, los rendimientos de la economía española eran decrecientes.
No sólo la construcción (un sector de escasa productividad y muy intensivo en factor trabajo) fue el culpable de la caída de la PTF en España. En todos los sectores se vio deteriorada la productividad. La causa de este fenómeno casi exclusivo de España dentro de la UE fue la influencia del sector público en todos los sectores. Las pequeñas y medianas empresas, fuentes potenciales de crecimiento e innovación, fueron las grandes perjudicadas de estos lazos de unión entre el sector público y una parte de las empresas del país.
5.000 euros más cada español
Tal y como señala Luis Garicano, catedrático de Economía en la prestigiosa London School of Economics, el capitalismo de amiguetes y la corrupción empeoraron la asignación de los recursos lastrando la productividad total de los factores. Si durante esos años la corrupción y el clientelismo no hubieran afectado a España de una forma tan destacada "el PIB hubiera sido en 2007 un 20% superior, unos 200.000 millones de coste por la mala asignación de recursos derivada de la corrupción: 5.000 euros por español", explica Garicano.
Tal y como señala Luis Garicano, catedrático de Economía en la prestigiosa London School of Economics, el capitalismo de amiguetes y la corrupción empeoraron la asignación de los recursos lastrando la productividad total de los factores. Si durante esos años la corrupción y el clientelismo no hubieran afectado a España de una forma tan destacada "el PIB hubiera sido en 2007 un 20% superior, unos 200.000 millones de coste por la mala asignación de recursos derivada de la corrupción: 5.000 euros por español", explica Garicano.
El informe económico citado al comienzo del texto explica que si el nivel de eficiencia hubiera sido estable, el crecimiento de la PTF hubiera sido del 0,8% anual, lo que hubiera permitido un crecimiento del PIB muy superior al visto, además de conservar la competitividad de los bienes y servicios producidos en España.
El informe sentencia que la "productividad acumulada se estancó en España por el intenso crecimiento de la errónea asignación del factor capital y del factor trabajo, que se acumularon en sectores que no correspondían" debido a las decisiones parciales del sector público, que no elegían a las empresas más eficientes, sino a las empresas en las que trabajaba el amigo de, el familiar de o el conocido de.
Esto concluyó en un crecimiento excesivo de empresas poco productivas y poco eficientes que aumentaban su tamaño gracias a los contratos y beneficios que conseguían, y también gracias a la barata financiación existente durante la época. Mientras que otras empresas más eficientes, innovadoras y productivas se quedaban fuera del mercado.
7 Concluding Remarks
Spanish growth during the 1994-2007 expansion was based on factor accumulation rather than pro- ductivity gains. In particular, annual TFP growth was -0.7%, which is low in comparison to other developed economies such as the US or EU. In this paper, we argue that the source of negative TFP growth has been the increase in the within-sector misallocation of production factors across firms. Furthermore, we find the phenomenon to be present in all sectors of activity, which casts doubt on the widespread view that specialization in low productivity sectors such as construction was the main force behind Spanish low TFP growth.
In order to shed some light on the potential sources of this phenomenon in Spain, we find that industries in which the influence of the public sector is larger (e.g. through licensing or regulations) experienced significantly larger increases in misallocation. In contrast, other characteristics such as skill intensity, innovative content or financial dependence are unrelated to changes in allocative efficiency. Turning to firm-specific distortions, we find that small and young firms in Spain might have faced higher market distortions than large and mature firms.
In light of these findings, the next challenge is to develop a framework for understanding the major forces and policies behind these patterns of allocative efficiency and firm-specific distortions. For instance, Garc ́ıa-Santana et al. (2015) explore the role of public procurements on the allocation of resources in the private sector.
References
Spanish growth during the 1994-2007 expansion was based on factor accumulation rather than pro- ductivity gains. In particular, annual TFP growth was -0.7%, which is low in comparison to other developed economies such as the US or EU. In this paper, we argue that the source of negative TFP growth has been the increase in the within-sector misallocation of production factors across firms. Furthermore, we find the phenomenon to be present in all sectors of activity, which casts doubt on the widespread view that specialization in low productivity sectors such as construction was the main force behind Spanish low TFP growth.
In order to shed some light on the potential sources of this phenomenon in Spain, we find that industries in which the influence of the public sector is larger (e.g. through licensing or regulations) experienced significantly larger increases in misallocation. In contrast, other characteristics such as skill intensity, innovative content or financial dependence are unrelated to changes in allocative efficiency. Turning to firm-specific distortions, we find that small and young firms in Spain might have faced higher market distortions than large and mature firms.
In light of these findings, the next challenge is to develop a framework for understanding the major forces and policies behind these patterns of allocative efficiency and firm-specific distortions. For instance, Garc ́ıa-Santana et al. (2015) explore the role of public procurements on the allocation of resources in the private sector.
References
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[1] Bartelsman, E., J. Haltiwanger and S. Scarpetta (2013) “Cross-Country Differences in Produc-
tivity: The Role of Allocation and Selection,” American Economic Review, vol. 103(1), pp.
305-334.
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[2] Bellone, F. and J. Mallen-Pisano (2013) “Is misallocation higher in France than in the United
States?,” GREDEG WP 38.
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[3] Berge, T. and O. Jord ́a (2013) “A Chronology of Turning Points in Economic Activity: Spain
1850-2011,” Journal of the Spanish Economic Association SERIES, vol. 4(1), pp. 1-34.
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[4] Cecchetti, S. and E. Kharroubi (2012) “Reassessing the impact of finance on growth,” BIS
Working Papers No. 381.
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[5] Christopoulou, R. and Vermeulen, P. (2012) “Markups in the Euro area and the US over the
period 1981-2004: a comparison of 50 sectors,” Empirical Economics, vol. 42(1), pp. 53-77.
https://www.cemfi.es/~pijoan/Work_in_Progress_files/mis_jan_2015-v03.pdf
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