29/2002
November
Industrialization and the Role of Competitive Advantages: A Micro Level Analysis of the Determinants of Chilean Plant Efficiency
 
Tommaso Ciarli - Gustavo Crespi


Industrial competitiveness of a country relies on the competitiveness of its firms and their specialisation. We argue that both trade and industrial policies are important to increase it, but while the first alone push toward the reliance on the only static comparative advantages, the latter crate dynamic assets. We test how they both affect the efficiency of Chilean plants, a country strongly specialised in resource-based commodities, using ‘one-step' stochastic frontier production estimates. We find that local endowments have mainly an indirect effect, through plant's characteristic. Nevertheless, we confirm that the supply of dynamic assets has an essential role, and external sources of knowledge are also important. However, we warn that the latter, if not supported by local complementary efforts, can have negative effects on the long-run growth.

 
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