TOTAL FACTOR PRODUCTIVITY, TECHNICAL CHANGE, TECHNICAL EFFICIENCY AND POTENTIAL GDP IN LATIN AMERICA

Abstract

In this article the factor productivity of a group of Latin American economies is calculated and the contribution of technical change and technical efficiency is analyzed according to the economic growth of the region. In order to calculate technical change and technical
efficiency, a Cobb Douglas production function is estimated based on two comparable methodologies: Fixed effects data panel and stochastic frontier. It can be concluded that for the annual data sample for 1980 – 2009 there is a light drop in the technical efficiency and an increase in technical progress for the majority of the country. The most efficient countries are: Panama, Uruguay and Mexico and the less efficient ones are Nicaragua, Bolivia, Honduras and Paraguay.