Heterogeneity of total factor productivity across Latin American countries: evidence from manufacturing firms∗

We use a firm production function approach to generate estimates of total factor productivity (TFP) and labor productivity in the manufacturing sector for a group of Latin American countries. We exploit these estimates to study the relative position of countries within this sector and to explore the main correlates of firm productivity. We find that while the exact ranking of average TFP is sensitive to the underlying form of the production function, Chile and Argentina average level of TFP is found to be consistently above that of other countries, while Bolivia firms always appears at the bottom of the distribution. While other aspects matter, the main factors explaining differences in productivity across firms are related to country-level, not firm-level, characteristics. JEL classification: D24, D22, C23.