FIRM INNOVATION AND PRODUCTIVITY IN LATIN AMERICA AND THE CARIBBEAN The Engine of Economic Development Edited by MATTEO GRAZZI & CARLO PIETROBELLI Firm Innovation and Productivity in Latin America and the Caribbean Matteo Grazzi • Carlo Pietrobelli Editors Firm Innovation and Productivity in Latin America and the Caribbean The Engine of Economic Development Inter-American Development Bank Except where otherwise noted, this work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 IGO License To view a copy of this license, visit https://creativecommons.org/licenses/ by-nc-nd/3.0/igo/ Editors Matteo Grazzi Inter-American Development Bank Washington, DC, USA Carlo Pietrobelli Inter-American Development Bank Washington, DC, USA ISBN 978-1-349-58150-4 ISBN 978-1-349-58151-1 DOI 10.1057/978-1-349-58151-1 (eBook) Library of Congress Control Number: 2016941889 © Inter-American Development Bank 2016 This book is published with open access The opinions expressed in 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party material in this book are included in the work’s Creative Commons license, unless indicated otherwise in the credit line; if such material is not included in the work’s Creative Commons license and the respective action is not permitted by statutory regulation, users will need to obtain permission from the license holder to duplicate, adapt or reproduce the material This work is subject to copyright All commercial rights are reserved by the Inter-American Development Bank, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Nature America Inc New York FOREWORD After a decade of favorable international conditions, most Latin American and Caribbean countries are now confronting their reality Despite the observed increases in growth rates, decline in unemployment, and spectacular figures in investment and saving, factors behind long-run growth and sustainability are still showing meager results Total factor productivity has not changed in most countries in the region for more than a decade This is alarming, since improvements on the inspirational side of economic growth are heavily correlated with movements in income per capita Most of the theoretical and empirical efforts have focused on analyzing the sources of this delay on a macro-level By examining aggregate figures related to research and development (R&D), foreign direct investments (FDI), macro-regulations, and sometimes educational issues, it is possible to derive policy implications almost without considering several meso and micro-characteristics of the countries that may determine the success or failure of these recommendations We have recently learned that heterogeneity matters In most of the countries in the region, not only different sectors show dissimilar productivity performances but this phenomenon is also observed inside the sectors To disentangle those macro-factors that are affecting the productive rhythm of the economies from those that are more sector or even firm-specific, we must use different lenses for different observation units The mechanism behind those patterns may vary not only among countries but also among sectors and firms Thoughtfully considering the assumption that not only the level of productivity matters but also its variance, this book complies several empirv vi FOREWORD ical works that by using different lenses aims to reveal which variables may have a systematic effect on the productivity evolution observed at a firm and sectorial level in Latin American and Caribbean countries The book emphasizes knowledge generation, diffusion, and implementation through innovation, while exploring the roles of human capital, financial resources, and linkages that also shape firms’ inspiration Results provided throughout the book show that there are several dimensions that matter, including the ways that policy-makers design and implement public support that aim to enhance productivity Some results were expected but others were not Some variables are relevant in certain countries, others in certain productive sectors The book is an invitation to a wider group of researchers and policy-makers to have a closer look at what is happening at a sectoral or even firm level Understanding the challenges that most of these firms, sectors, and countries face and the way they surpass them is key for the design of public policies This is part of the role of the Inter-American Development Bank, and especially of the Competitiveness and Innovation Division By producing knowledge products in a collaborative and effective manner, promoting a growing research community, and supporting our policy-makers in the areas of innovation, productivity, and human capital formation, we can help to increase economic performance and, in turn, improve the overall welfare of all citizens in the region José Miguel Benavente Division Chief Competitiveness and Innovation Division Inter-American Development Bank ACKNOWLEDGMENTS This book was prepared by a team led by Matteo Grazzi and Carlo Pietrobelli of the Competitiveness and Innovation Division of the InterAmerican Development Bank, who coordinated the research and edited the book It is part of the research project on “Policies and Institutions for Productivity in Latin America and the Caribbean,” financed by the Institutional Capacity Strengthening Fund (ICSF) Eddy Szirmai acted as external scientific advisor and José Miguel Benavente provided guidance throughout the project Leonardo Ortega and Siobhan Pangerl provided excellent research assistance Sarah Schineller oversaw the editing and production of this volume, working closely with the editors and authors The construction of a book is a lengthy process during which the team was fortunate to receive valuable comments and advice from many people We wish to thank Martin Chrisney, Jorge Rodriguez Meza, and Federica Saliola for launching the initial idea of a book on enterprise performance in Latin America and the Caribbean In addition, we thank Rita Almeida, Leopoldo Avellan, Juan Blyde, Arturo Galindo, Juan Carlos Navarro, Jocelyn Olivari, Carmen Pages, Joan Prats, Graciana Rucci, Hong Tan, Sebastián Vergara, Christian Volpe Martincus, and Pluvia Zuñiga for their useful and insightful comments at various stages of the preparation of the book This volume has greatly benefited from participation and discussions at an IDB Workshop where preliminary drafts and ideas were discussed (Washington DC, USA, June 2014), and in many other seminars where preliminary drafts of the entire manuscript or individual chapters were vii viii ACKNOWLEDGMENTS presented These include: Centro Rossi-Doria Workshop “Global Value Chains for Food and Nutrition Security” (University Roma Tre, Italy, September 2014); The European Trade Study Group—ETSG International Conference (Munich, Germany, September 2014); Universidad del Rosario Economics Seminar (Bogotá, Colombia, November 2014); ORT University Innovation Seminar (Montevideo, Uruguay, November 2014); UNU–MERIT Conference on “Future Perspectives on Innovation and Governance in Development” (Maastricht, the Netherlands, November 2014); AQR-IREA Seminar (Barcelona, Spain, February 2015); the Eighth Conference on Micro Evidence on Innovation and Development MEIDE (New Delhi, India, February 2015); VI Congreso de la Asociación de Economía para el Desarrollo de la Argentina (Buenos Aires, Argentina, May 2015); IDB Second Seminario Relampago IFD (Washington DC, USA, June 2015); XX Latin American Economic Association (LACEA) Annual Meeting (Santa Cruz de la Sierra, Bolivia, October 2015) The authors thank all colleagues that discussed their work on these occasions, greatly improving its quality The authors and editors are solely responsible for any errors in information and/or its analysis Likewise, the opinions and policy recommendations stated in this book are those of the authors and not represent the official position of the IDB, its President, or the Board of Directors CONTENTS Determinants of Enterprise Performance in Latin America and the Caribbean: What Does the Micro-Evidence Tell Us? Matteo Grazzi, Carlo Pietrobelli, and Adam Szirmai Innovation Dynamics and Productivity: Evidence for Latin America Gustavo Crespi, Ezequiel Tacsir, and Fernando Vargas 37 Innovative Activity in the Caribbean: Drivers, Benefits, and Obstacles Preeya Mohan, Eric Strobl, and Patrick Watson 73 Information and Communication Technologies, Innovation, and Productivity: Evidence from Firms in Latin America and the Caribbean 103 Matteo Grazzi and Juan Jung On-the-Job Training in Latin America and the Caribbean: Recent Evidence Carolina González-Velosa, David Rosas, and Roberto Flores 137 ix 332 INDEX exporting international linkages, econometric analysis of, 297–298, 298t, 301–305, 302t, 304t, 306–310t “learning-by-exporting”, 239n9, 287 sales, export vs non-export, 214–216, 215f, 239n9 trade in value added and GVCs, 288–297, 290f, 293t, 295–296f in young firms, 174 external capabilities innovation investments, determinant of, 16, 42, 47–53, 48–49t productivity performance and, 7–8 external knowledge, access to, 16, 42, 47–53, 48–49t, 56–58 F Fabiani, S., 110, 131n9 Fafchamps, M., 287 Faggian, A., 119, 121 Fally, T., 296 Farole, T., 298 FDI See foreign direct investment (FDI) Federico, Juan, 24, 168, 182 Feenstra, R.C., Felder, J., 76 female entrepreneurs, 174, 200n10, 253 Fernandez, A., 310n2 Fernández-Arias, E., 2, 3f, 4f, 74, 137 Ferrero Zucoloto, G., 163n10 financial variables, conversion of, 13 financing, access to bank branches, rates of, 251–252 banking products, access to, 253, 255–257t, 262f banking system changes, 251–252 constraints on, 257–261, 259–260t credit market structure and access, 247–252, 270–273, 272t, 321 data on, 27–28, 246 determinants for firms, 263–265 firm-and country-level characteristics, role of, 266–270t firm financing, Caribbean, 226–227, 226t, 227–230f firm financing, LAC, 252–261, 254–255t firm-level characteristics and, 248–249, 252–253, 279nn1–2 foreign banks, role of, 251–252, 274–276t growth and performance, impact on, 245–247, 320–321 innovation investments, determinant of, 16, 42, 47–53, 48–49t legal systems, impact of, 249 lending technologies, bank, 248 loan application measuring, 257–261 male-vs female-owned firms, 174, 200n10, 253, 256t on-the-job training, impact on, 139, 140t policy implications for, 277–278 small and medium enterprises, LAC vs Caribbean, 211–212 structure of financing, 253–255t Finland, growth accounting in, 2–3, 2t, 105f firm development macroeconomic vs microeconomic approach to, 7–8, 324 productivity performance, 3–9, 4f public support for, 9–10, 9–10t firms surveyed, 11–12, 11t Flores, Roberto, 21, 137 INDEX Foray, D., 51 Foreign Direct Investment (FDI) econometric analysis of productivity, 297–298, 298t, 301–305, 302t, 304t, 306–310t innovation and productivity, 42, 47–53, 48–49t, 55, 66n19, 321–322 trade in value added and GVCs, 285, 288–297, 290f, 293t, 295–296f foreign-owned banks, role of, 248– 253, 274–276t foreign-owned firms See international linkages Forman, C., 119 Foster, L., Foster, M., 170 France, innovation in, 39, 75 Francis, D., 211, 213, 239n7 franquicia tributaria, 146, 148, 163n12 Frazis, H., 145 Freeman, C., 73 Fukao, K., 310n4 G Galasso, A., 50 Galindo, A.J., 246, 249 Galliano, D., 111 Gambardella, A., 111 Garnsey, E., 169 GDP per capita Caribbean economies, 209–210, 209t LAC vs comparison countries, 2–3, 2t Latin American economies, 2–4, 2t, 37 generalized method of moments (GMM), 120 333 Gereffi, G., 303 Gibson, J., 240n17 Gilbert, B., 171 Gilchrist, S., 103, 119 Girma, S., 310n2, 310n4 Girma, S.A., 47, 310n2 Giunta, A., 110, 111 Global Entrepreneurship Monitor, 24, 176 Global Financial Development Database, 251–252 global value chains (GVCs), 288–297, 290f, 293t, 295–296f Goedhuys, M., 231, 240n24 Gompers, P.A., 171 González-Velosa, Carolina, 21, 137 Gorg, H.B., 47 Gormley, T.A., 273 Grant, R., 171 Grazzi, Matteo, 1, 137, 245, 317 Greenaway, D., 287 Greene, W.H., 111 Greiner, L.E., 169 Grenada banking products, access to, 257t economy, characterization of, 209t education and skill levels, worker, 219, 220f entrepreneurship in, 217–218f financing constraints, 260t financing structure in, 255t firms surveyed, 11t ICT usage in, 213f innovation activities, 9t, 78–80t, 94t, 96t sales, export vs non-export, 214, 215f size of firms, 212f, 239n7 Grenadines See St Vincent & the Grenadines Griffith, R., 37–40, 43, 45, 65–66nn8–10, 73–77, 99n2 334 INDEX Griliches, Z., 42, 44, 73, 75 Grilli, L., 170 Grossman, G., 287 growth accounting ICT adoption and, 103 LAC vs comparison countries, 1–2, 2t TFP performance, 2–4, 2t, 3f, 32n2 Guatemala banking products, access to, 257t financing constraints, 260t financing structure in, 255t firms surveyed, 11t on-the-job training, 143t, 149f productivity performance, 4f TFP performance relative to U.S., 3–4 young firms, characteristics of, 174, 196t Guloglu, B., 39 Gutiérrez, L.H., 120 Guyana banking products, access to, 257t credit access and financing constraints, 252, 260t economy, characterization of, 209t, 210 education and skill levels, worker, 219, 220f, 222 entrepreneurship in, 217–218f, 221 financing structure in, 255t firm operation, obstacles to, 226t, 227, 228f, 230t, 231 firms surveyed, 11t ICT usage in, 213f, 214 innovation activities, 9t, 78–80t, 79–80, 94t, 96t sales, export vs non-export, 215f size of firms, 212f, 239n7 GVCs See global value chains (GVCs) H Haelermans, C., 141 Hall, B., 39, 40, 52, 65, 65n1, 65n3, 66n9, 75, 76, 160 Hall, R.E., 4, 38, 39, 73 Haller, S.A., 110, 111 Hallward-Driemeier, M., 226, 228 Hansen, H., 258 Harris, R., 310n4 Harrison, A.E., 288, 310n3 Hayakawa, K., 287 Heckman, J.J., 22, 116, 138, 145, 162n8, 264 Hegde, D., 40, 76 Helpman, E., 287, 288, 297 Hempell, T., 120 Henrekson, M., 170 Heshmati, A., 40 heterogeneity in Caribbean firms, 211 credit access and financing constraints, 252, 258, 277, 280n14 innovation in Latin America, impact of, 17, 39–40, 60, 62–63, 62f, 63t of on-the-job training, effect of, 157–158, 157t productivity performance, 6–7, 318, 322–323 in young firms, 178, 185 Hijzen, A., 288, 310n3 Hitt, L.M., 104, 119, 120 Hollenstein, H., 111 Honduras banking products, access to, 257t financing constraints, 260t financing structure in, 255t firms surveyed, 11t internet diffusion and use, 106 on-the-job training, 143t, 144–145, 144f, 145f, 147t, 149, 161t INDEX productivity performance, 4f TFP performance relative to U.S., Hsieh, C.T., Hulme, D., 279n9 human capital education and skill levels, worker, 219–222, 220f, 221f entrepreneurship, 216–219, 217f, 239n10 ICT adoption, effect on, 115 innovation and productivity, 42, 47–53, 48–49t, 319–320 principal characteristics of, 216–222, 319–320 workforce, 219–222 in young firms, 24, 174 Hummels, D., 311n5 Hunneus, C., 138, 145 I Ibarra García, Sabrina, 24, 167 Ibarrarán, P., 141 ICTs See information and communication technologies (ICTs) Ientile, D., 163n11 importing international linkages, econometric analysis of, 297–298, 298t, 301–305, 302t, 304t, 306–310t sales, export vs non-export, 214–216, 215f, 239n9 trade in value added and GVCs, 288–297, 290f, 293t, 295–296f India, productivity performance, informal sector, lack of data on, 12 information and communication technologies (ICTs) adoption of, 107–118, 108t, 112–114t, 117–118t, 319 335 Caribbean firms, usage in, 213–214, 214f data on, 104–107 economic growth, impact of, 19–21, 103–104 email, use of, 106–107, 107f human capital, effect on, 115 innovation and productivity, effect on, 119–130, 124–125t, 128t innovation investments, impact of, 51–52 internet diffusion and use, 104–107, 105f, 107f, 319 policy implications for, 130 research on, need for, 130 websites, use of, 105–107, 107f, 225 innovation activities, Caribbean characteristics of firms, 94t, 96t data and analysis, 18, 74–75, 77–90, 78t econometric analysis and results, 90–97, 97t foreign investment and, 19 growth and performance, impact on, 9t, 17–19, 73–80, 78–80t, 96–98, 97t, 318 innovation and productivity, 17–19, 73–77 investing in, 93–96 product and process innovation, 19, 80f, 83t productivity differences, non and semi-parametric analysis of, 80–90, 81–82t, 83f, 87–88f public financial support, 19, 322 research and development, 75–77, 96–98 research on, need for, 17–18, 324 technological innovation, investment in, 95–98, 99n2 types of activities, 78–80, 79t 336 INDEX innovation activities, Latin America agglomeration economies and, 20, 50–51, 55 competition and, 51–52 data and methodologies for, 38–41 dataset and empirical implementation, 46–53, 48–49t determinants of innovation, 15–16, 42, 47–53, 48–49t external knowledge, access to, 16, 42, 47–53, 48–49t, 56–58 foreign investment and, 42, 47–53, 48–49t, 55, 66n19 growth and performance, impact on, 14–17, 37–41, 63–64, 318 heterogeneous impacts of, 17, 39–40, 60, 62–63, 62f, 63t, 322–323 ICTs, impact on, 51–52 intellectual property management, 47, 50, 73 investment in, impact of, 38–41 outputs and productivity, 56–58, 57t product and process innovation, 40, 47–53, 65n3, 65n8 public financial support, 16, 52, 322 R&D and productivity, 14–17, 37–40, 53–58, 54t research on, need for, 38, 65n2, 324 size of firms and, 53 spillovers and productivity, 17, 39, 58–60, 59t, 61t technological innovation and productivity, 39–40 intellectual property, innovation and, 47, 50, 73 Inter-American Development Bank, 37, 60, 69, 74, 137, 142, 212, 213, 277 Compete Caribbean Program, 33n13, 210, 240n19 EPFE survey, financing of, 14 WBES survey, financing of, 12 internal capabilities innovation investments, determinant of, 16, 42, 47–53, 48–49t productivity performance and, 7–8 internalization, financing and, 253, 254–255t, 256t international linkages data on, 285, 289, 291–292, 311n6 econometric analysis of productivity, 297–298, 298t, 301–305, 302t, 304t, 306–310t foreign-owned firms, 292–295, 293t, 295f321–322 growth and performance, impact on, 285–288, 305 multinational firms, innovation investments, 42, 47–53, 48–49t, 66n19 trade in value added and GVCs, 285, 288–297, 290f, 293t, 295–296f world production, fragmentation of, 288 International Telecommunications Union (ITU), 104–106, 109f internet and broadband connections See information and communication technologies (ICTs) Iossifov, P., 293t, 307t Irwin, D.A., 50 Isgut, A., 310n2 Ito, Y., 288, 310n3 J Jaffe, A.B., 51 Jaffe, D.M., 247 Jamaica banking products, access to, 257t INDEX credit access and financing constraints, 252, 260t economy, characterization of, 209t education and skill levels, worker, 220f, 222 entrepreneurship in, 17–218f, 221 financing structure in, 255t firm operation, obstacles to, 226, 226t, 228f, 230t, 231 firms surveyed, 11t ICT usage in, 213f, 214 innovation activities, 9t, 77, 78–80t, 94t, 96t on-the-job training, 143t productivity performance, 4f sales, export vs non-export, 215f size of firms, 212f tax system in, 226 Janz, N, 40 Jappelli, T., 249, 250 Javorcik, B., 310n4 Jefferson, G.H., 40, 76 Jensen, J.B., 216, 287 job creation growth of firms and, 183 innovation and, 39 in small and young firms, 168, 212, 216 Johansson, D., 170 Johnson, R.C., 311n5 Jones, C.I., 4, 38, 39, 73 Jones, J., 220 Jordan, V., 121 Jorgenson, D.W., 103, 119 Jovanovic, B., Jung, Juan, 19, 103 K Kaiser, U., 120 Kaluza, P., 210 Kamien, M., 50 337 Kang, S.M., 40, 76 Kantis, Hugo, 24, 167, 168, 171, 182 Karlsson, C., 111 Karshenas, M., 107 Katz, J., 7, 38 Kaufman, D., 263f, 272t, 276t, 279n11 Keilbach, M., 171 Keller, W., 111 Kenya ITC adoption in, 105f on-the-job training, 141 Kimura, F., 288, 310n3 Kirton, C., 221 Kiyota, K., 288, 310n3 Klenow, P.J., 4, 6, 50 Klepper, S., 53, 122 Klomp, L, 40 Kneller, R., 287 knowledge-based sectors economic growth in Latin America and, 37–38 entrepreneurship in, 216 young firms, growth and performance of, 24, 177 Kolmogorov–Smirnov test, 81t, 84, 90 Kon, Y., 258 Koopman, R., 289, 290f, 291, 311n5 Kumar, N., 47 Kuntchev, V., 249 L Labor market theory, 22 labor productivity banking products, access to, 256t in Caribbean firms, 222–225, 223–224f credit access and financing constraints, 258, 261f, 280n12 financing by firms, 252–261, 254–255t 338 INDEX labor productivity (cont.) growth accounting, 2t, 3–4, 32n2 innovation, impact on, 39–40, 83f, 85t, 87–88f, 96–97 as measure of performance, 14 productivity performance, 5–7 in young firms, 180–182, 181t, 320 LAC-7 See Argentina; Brazil; Chile; Colombia; Mexico; Peru; Venezuela Lall, S., Latin American economies See also innovation activities, Latin America; specific countries economic growth, factors driving, entrepreneurship in, 24, 168, 169, 174, 176 external vs internal factors, 7–8 financing by firms in, 252–261, 254–255t firms surveyed, 11–12, 11t GDP per capita, 2–4, 2t, 37 growth accounting in vs comparison countries, 1–2, 2t informal sector firms, 12 macroeconomic reforms, 7–8, 324 productivity performance, 3–9, 4f slowdown in growth of, 1–4, 317 TFP performance relative to U.S., 3–4, 3f, 32n2 Laursen, K., 216 Lavopa, A., Lazear, E., 159, 162n2 “learning-by-exporting”, 239n9, 287 Lederman, D., 74, 168, 169, 311n13 Lee, C., 171 Lee, J.W., 220f, 239–240n14 Lee, K., 40, 76 Lefebvre, L., 131n8 legal systems, credit access, 249 lending technologies, bank, 248, 250 Lera-Lopez, F., 111 Lerner, J., 171 Leuven, E., 141 Levie, J., 169 Levine, R., Levine test, 303 Levinsohn, J., 155, 164n23 Levinthal, D., 39, 45, 53, 75, 93, 120 Levy, F., 162n7 Lichtenstein, B., 169 Lileeva, A., 310n2 Loof, H., 40 López, A., 76 López, R., 287, 310n2 Loukis, E.N., 103, 119, 120 Love, P.E.D., 131n8 Lucchetti, R., 111 Lundvall, B.A., Lynch, L., 162n2 M Mack, E., 119, 121 macroeconomic reforms, 7–8, 324 Maffioli, A., 52, 160 Mairesse, J., 38–40, 52, 65–66nn8–9, 73, 75, 76 Makler, H., 249 Malaysia, innovation activities, 40 Malerba, F., Mansfield, E., 108 manufacturing sector banking products, access to, 256t data on, 12–13 financing by firms, 252–261, 254–255t innovation activities in, 41 product innovation in, 40 productivity in Caribbean firms, 222–225, 223–224f, 236–238t productivity performance, 5–6 services sector vs in productivity, 212–213 INDEX Martínez Pería, M.S., 279n2 Martins, P.S., 287 Mason, C., 171 McGuckin, R.H., 216 McKenzie, D., 240n17, 279n1 McMillan, M., measures of performance, 13–14 Melitz, M., 287 Mercer-Blackman, V., 163n10 Mexico banking products, access to, 255, 257t banking systems in, 251–252 credit access and financing constraints, 249–252, 260t financing structure in, 255t firms surveyed, 11t foreign-owned banks, 252 innovation activities, 40 international linkages, 292–297, 293t, 295f, 305 internet diffusion and use, 106 on-the-job training, 143t, 144f, 149f productivity performance, 4f young firms, 196t Mian, A., 248 Micco, A., 279n2 micro-finance institutions, 279n9 micro-firms See entrepreneurship; small and medium enterprises (SMEs) Middle East, internet diffusion and use in, 104–107, 105f, 107f Middleton, J., 158 migration patterns, Caribbean, 220–221, 240nn18–19 Ministry of Labor of Chile, 146 Miroudot, S., 311n5 Mohan, Preeya, 17, 73 Mohnen, P., 38–40, 46, 52, 65n3, 66n9, 73, 75 339 Montalbano, Pierluigi, 21, 29, 285 Moretti, E., 51 Mourshad, M., 138 Mueller, G.C., 50 multinational firms, innovation investments, 42, 47–53, 48–49t Murakami, Y., 310n3 Murnane, R.J., 162n7 N Narula, R., 111 Naudé, W., 218 Navarro, J.C., 40, 52, 55, 76 NCST, 73–74 necessity entrepreneurship, 24, 174 Nelson, R.R., 7, 58 Nenci, Sylvia, 29, 285 Network of Indicators of Science and Technology (RICYT), 65n2 Nicaragua banking products, access to, 257t financing constraints, 260t financing structure in, 255t firms surveyed, 11t informal sector firms, 12 internet diffusion and use, 106 on-the-job training, 143t, 144f Nightingale, P., 173, 200n1 Noguera, G., 311n5 Nugent, S., 226 Nurse, K., 74, 220, 221 O OJT See on-the-job training (OJT) Oliner, S.D., 103 Ongena, S., 248 on-the-job training (OJT) appropriation problems, effect on, 139–140, 140t, 146, 151, 153, 158, 163n17 340 INDEX on-the-job training (OJT) (cont.) benefits of investing in, 138–139 data and methodologies for, 14, 142, 144, 162nn3–4 determinants of, 149–154 financing, 139–140, 147–149, 149f, 160, 161t general vs specific contents of, 139, 146–147, 147f, 159–160 growth and performance, impact on, 21–23, 137–142, 154–159, 156t heterogeneous effects of, 157–158, 157t high-vs low-skilled workers, impact on, 145–146 incidence and intensity of, 142–145, 143t, 144f, 145f incidence of vs non-LAC countries, 143–145, 144f, 162n5 information problems related to, 139, 140t managerial practices and, 140, 140t, 162n2 market failures affecting, 139–140, 140t, 162nn1–2 policy recommendations for, 160–161 public financial support for, 147–149, 149f, 161t, 163n12, 323 research on, need for, 160–161 returns for LAC manufacturing firms, 154–159, 156t social returns on, lack of data on, 142, 143 technological innovation, impact on, 139–140, 140t, 319–320 training received by occupation category, 145f training vs not training, impact of, 149–154, 150t, 151t, 152f, 160 wages affected by, 139–143, 162n1 Oosterbeek, H., 141 ordinary least square (OLS) regressions, 25, 173, 180, 182 Organisation for Economic Co-operation and Development (OECD), 14, 38, 40, 41, 73, 75, 137, 253 Ortiz, E.A., 74 P Padilla, A.J., 249 Pagano, M., 249, 250, 279n3 Pagés, C., 2, 6, 32–33n6, 32n3, 137, 168, 211, 212, 218 Pakes, A., 7, 42, 75 Panama banking products, access to, 257t banking systems in, 251 credit access and financing constraints, 251, 260t financing structure in, 255t firms surveyed, 11t innovation activities, 41 internet diffusion and use, 106 on-the-job training, 143t, 144, 144f, 149f, 161t productivity performance, 4f young firms, 174, 197t, 200nn8–9 Pangerl, Siobhan, 25, 137, 207, 245 Paraguay banking products, access to, 257t female entrepreneurs, 200n10 financing constraints, 260t financing structure in, 255t firms surveyed, 11t informal sector firms, 12 on-the-job training, 143t, 144f, 149f productivity performance, 4f young firms, 174, 175, 197t, 200nn9–10 INDEX Park, A., 310n2 Peirano, F., 53 Pellegrino, G., 168 Pérez, P., 40, 76 Peru banking products, access to, 257t banking systems in, 251–252 credit access and financing constraints, 250–252, 260t financing structure in, 255t firms surveyed, 11t foreign-owned banks, 252 on-the-job training, 143t, 144f, 149f productivity performance, 4f young firms, 174, 175, 198t, 200nn8–9 Petersen, M.A., 248, 272 Petkova, N., 310n4 Petrin, A., 155, 164n23 Pietrobelli, Carlo, 1, 29, 137, 245, 285, 303, 317 Pisano, G., Pischke, J.S., 162n1 Piscitello, L., 310n4 Polder, M., 120 Presbitero, Andrea, 27, 131n7, 188t, 245, 258 product or process innovations in Caribbean firms, 19, 80f, 83t in Latin American firms, 39–40, 47–53, 65n3, 65n8, 175 in young firms, 175 PROTEQin data, 14, 25, 33n13, 207–208, 211, 214, 219–221, 225, 235 public financial support firm development, 9–10, 9–10t innovation activities, Caribbean, 19, 322 innovation activities, Latin America, 16, 52, 322 341 on-the-job training (OJT), 147–149, 149f, 161t, 163n12, 323 purchasing power parity (PPP), 13, 210 Q Quince, T., 171 R Rabbiosi, L, 310n4 Rabellotti, Roberta, 27, 131n7, 188t, 245, 258, 303 Raffo, J., 40, 55, 76 Ragousssis, A., 311n5 Rajan, R.G., 248, 272 Rand, J., 258 Repetto, A., 5, 32n6 research and development (R&D) innovation and productivity, Caribbean, 17–19, 73–77, 318 innovation and productivity, Latin America, 14–17, 37–40, 53–56, 54t, 318 in young firms, 175 Robinson, C., 310n4 Rodríguez, J., 141 Rodriguez-Clare, A., Roper, S., 65–66n8 Rosas, David, 21, 137 Rosholm, M., 141 Rouvinen, P., 38, 39, 73 Ruprah, I., 207, 209t, 210, 226, 239n3 Russell, T., 247 S St Kitts & Nevis banking products, access to, 257t economy, characterization of, 209t, 210 342 INDEX St Kitts & Nevis (cont.) education and skill levels, worker, 220f entrepreneurship in, 217–218f financing constraints, 260t financing structure in, 255t firms surveyed, 11t ICT usage in, 213f informal sector firms, 12 innovation activities, 94t, 96t on-the-job training, 143t sales, export vs non-export, 215f size of firms, 212f, 239n7 Saint Lucia banking products, access to, 257t economy, characterization of, 209t education and skill levels, worker, 220f entrepreneurship in, 217–218f financing constraints, 260t financing structure in, 255t firms surveyed, 11t ICT usage in, 213f innovation activities, 9t, 78, 78–80t, 79–80, 94t, 96t on-the-job training, 143t sales, export vs non-export, 215f size of firms, 212f, 239n7 St Vincent & the Grenadines, 9t, 94t, 96t banking products, access to, 257t economy, characterization of, 209t education and skill levels, worker, 220f entrepreneurship in, 217–218f financing constraints, 260t financing structure in, 255t firms surveyed, 11t ICT usage in, 213f innovation activities, 9t, 78–80t sales, export vs non-export, 215f size of firms, 211, 212f, 239n7 salels See exporting; international linkages sales diversification, 47, 50 Salis, S., 310n4 Sánchez, I.G., 40, 76 Santoleri, P., 120 Saunders, A., 120 Schiantarelli, F., 246, 249 Schmid, J.P., 226 Schmukler, S.L., 251, 252 Schneider, C., 168 Schreyer, P., 119 Schumpeter, J., 73 Schumpeter II regimes, 5, 23–24 Serti, F., 310n2 services sector banking products, access to, 256t data limitations on, 12–13 financing by firms, 252–261, 254–255t growth and performance, impact on, 5–6, 212–213 product innovation in, 40 productivity in Caribbean firms, 222–225, 223–224f, 236–238t Shane, S., 170 Shapira, P., 40, 76 Sichel, D., 103 Sicherman, N., 110 Siedschlag, I., 110, 111 Sierra, R., 226 size of firms banking products, access to, 256t Caribbean firms by size, 211–213, 212f credit access, constraints on, 249, 279nn1–2 financing by firms, 252–261, 254–255t financing structure and, 254–255t, 256t INDEX firm development, public support for, 9–10, 9–10t innovation activities and, 53 on-the-job training, 147–149, 147t, 149f, 161t productivity, effect on, 211–213, 212f small and medium enterprises, LAC vs Caribbean, 211–212 young firms, 174 skill formation See on-the-job training (OJT) skill shortages, Caribbean, 219–221, 220f, 240nn16–17, 240nn20–21 Sleuwaegen, L., 231, 240n24 small and medium-sized enterprises (SMEs), 253–255, 254t, 255, 256t, 279n9 in Caribbean, 211–212 credit access for, 248–250, 279nn1–2 growth and performance of, 24–25, 175–177, 176f productivity of, 178 small economies, defined, 209, 239n3 SMEs See entrepreneurship; small and medium enterprises (SMEs) Solimano, A., Soto, R., South Asia innovation activities, 40 internet diffusion in, 104–107, 105f, 107f South Korea growth accounting in vs LAC, 2t innovation activities, 40 TFP performance in, 2–3 Spiegel, M., 120 spillovers, productivity and, 17, 39, 58–60, 59t, 61t Stallings, B., 246 343 state-owned banks, role of, 248–249, 251, 279n2 Stehrer, R., 311n5 Stiglitz, J.E., 247 Stinchcombe, A., 170 Stoneman, P., 107 Storey, D.J., 170, 258 Strahan, P.E., 248 Strobl, Eric, 17, 73 Stuart, R., 170 Suárez, D., 40, 52 Suriname banking products, access to, 257t credit access and financing constraints, 252, 260t economy, characterization of, 209t education and skill levels, worker, 220f, 222 entrepreneurship in, 216, 217–218f, 221 financing structure in, 255t firm operation, obstacles to, 226t, 227, 228f, 230t, 231 firms surveyed, 11t ICT usage in, 213f, 214 innovation activities, 9t, 78–80t, 79–80, 94t, 96t sales, export vs non-export, 215f size of firms, 212f, 239n7 Survey of Productivity and Human Resources in Establishments (EPFE), 14, 142, 144, 147, 162n3 Syverson, C., 5, 8, 208, 231 Szirmai, Adam, 1, 137, 239n11, 317 T Tacsir, Ezequiel, 14, 37, 65n4, 153 Taiwan, innovation activities, 40 Tan, M., 110 tax rates, Caribbean, 226–227, 226t, 227–230f 344 INDEX technological adoption See information and communication technologies (ICTs); innovation activities Teece, D., Tekin, R.B., 39 Teo, T.S.H., 110 Thomas-Hope, E., 240n21 Thurik, R., 216 Timmer, M.P., 311n6 TiVA See Trade in Value Added (TiVA) Tobit model, 43–44, 53, 91–93 Tomasi, C., 310n2 Torrisi, S., 111 total factor productivity (TFP), 14 LAC relative to comparison countries, 2–4, 2t LAC relative to United States, 3–4, 3f as measure of performance, 14 tourism-based economies, 209t, 210, 213–214 trade See international linkages Trade in Value Added (TiVA), 14, 285, 288–297, 290f, 293t, 295–296f training See on-the-job training (OJT) Trefler, D., 310n2 Trinidad and Tobago banking products, access to, 257t credit access and financing constraints, 252, 260t economy, characterization of, 209t, 210 education and skill levels, worker, 220f entrepreneurship in, 217–218f financing structure in, 255t firm operation, obstacles to, 228f, 230t, 231 firms surveyed, 11t ICT usage in, 213f informal sector firms, 12 innovation activities, 9t, 78–80t, 79, 94t, 96t on-the-job training, 143t, 144, 144f sales, export vs non-export, 215f size of firms, 212f Trivieri, F., 110, 111 U Ucbasaran, D., 170 Udell, G.F., 245 UNCTAD, 288, 294 United States growth accounting in, LAC vs., 1–2, 2t internet diffusion and use in, 104–107, 105f, 107f TFP performance in, 2t, 3–4, 3f, 32n2 Uruguay banking products, access to, 257t banking systems in, 251 credit access and financing constraints, 249, 260t credit markets in, 251 financing structure in, 255t firms surveyed, 11t innovation activities, 41 on-the-job training, 143t, 144–145, 144f, 145f, 147t, 161t productivity performance, 4, 4f young firms, 174, 175, 198t Urzúa, S., 141 V Van Biesebroeck, J., 310n2 Van de Ven, W.P.M., 116 INDEX Van Horen, N., 248, 250, 252, 273 Van Leeuwen, G., 40 Van Praag, B., 116 Van Zeebroeck, N., 119 Vargas, Fernando, 14, 37 Venezuela banking products, access to, 257t banking systems in, 251–252 credit access and financial constraints, 250–252, 260t financing structure in, 255t firms surveyed, 11t foreign-owned banks, 252 on-the-job training, 143t, 144f productivity performance, 4f Verhoogen, E.A., 287 Veugelers, R., 168 Vivarelli, M., 39, 216, 239n10 Vuletin, G.J., 12 W wages, 139–143, 162n1 Wagner, J., 214, 287 Wagner, R., 216 Watson, Patrick, 17, 73 WBES See World Bank Enterprise Survey (WBES) websites, use of, 105–107, 107f, 225 Weiss, A., 247 Wennekers, S., 216 Whittaker, H., 171 Williamson, O.E., Willmore, L., 52 Winkler, D., 298 Winter, S.G., Wooldridge, J.M., 302 workforce See human capital World Bank Enterprise Survey (WBES) firms interviewed, 9t, 77–78 345 methodology and data from, 10–14, 46 world financial systems, 252 World Input-Output Database (WIOD), 289, 311n6 World Trade Organization (WTO), 14, 285 Y Yang, Y., 287 young firms characteristics of, 23–25, 173–175, 200n8 credit access for, 248–249, 279nn1–2 data and methodologies on, 24, 167–168, 171–173 entrepreneurship, economic growth and, 169–171, 239nn10–12, 320 female-owned firms, 174, 200n10 growth and performance of, 24–25, 167–171, 175–177, 176f, 179t, 180–186, 181t, 184t, 188–199t innovation-related activities, 175 labor productivity, 180–182, 181t mature firms vs., 24–25, 174, 213 policy implications, 185–187 productivity, impact on, 23–25, 167–171 productivity gaps, effect of, 185 productivity of, 24–25, 175, 177–179, 178t, 179t research on, need for, 167–168, 187 robustness checks, 183, 185 sales and employment growth, 24, 182–183, 184t sales and exports, 174 346 INDEX Z Zambia ICT adoption in, 105f on-the-job training, 141 Zanfei, A., 111 Zitouna, H., 310n4 Zúñiga, P., 18, 38, 45, 53, 55, 64, 74, 76, 77, 91–97, 99n2 Zwick, T., 154, 158 .. .Firm Innovation and Productivity in Latin America and the Caribbean Matteo Grazzi • Carlo Pietrobelli Editors Firm Innovation and Productivity in Latin America and the Caribbean The Engine of. .. from Firms in Latin America and the Caribbean 103 Matteo Grazzi and Juan Jung On -the- Job Training in Latin America and the Caribbean: Recent Evidence Carolina González-Velosa, David Rosas, and. .. Trade, and Firm Productivity in Latin America and the Caribbean Pierluigi Montalbano, Silvia Nenci, and Carlo Pietrobelli 285 Innovation and Productivity in Latin American and Caribbean Firms: Conclusions