Determinants of Total Factor Productivity in Ecuador

Abstract

This article analyzes Ecuador’s economic growth for the period 1950–2014. The study focuses particularly on total factor productivity (TFP) and proposes a nonlinear function that allows the TFP to depend on a set of explanatory variables considered in the literature to be relevant in explaining economic growth. Specific variables for the Ecuadorian case are also included. Strong empirical evidence supporting positive effects of human capital and public infrastructure on TFP is found. The results suggest that oil revenues have no direct effect on TFP. Moreover, some key periods seem to have caused structural changes in TFP. The results are robust to different specifications and estimation methods.