Index of technical efficiency of Peruvian companies

Abstract

In a decade of low TFP —factorial total productivity— in Latin America, the paper shows evidence of the low level of TFP due to the degree of technical inefficiency of companies in the Peruvian productive sector case. For this, the technical efficiency indices of 116 875 companies (83 271 formal and 33 604 informal) distributed in 25 regions and ten productive sectors (agriculture, livestock, agriculture, mining, fishing, manufacturing, construction, commerce, hotels and restaurants, and the rest are non-governmental services). The estimates yielded a general average efficiency index for the regions and sectors of Peru of 37.94 —in other words, the total product of the companies would multiply by 2.6 without requiring additional productive factors—. This figure suggests that government or company interventions that induce technically efficient behaviors in production can contribute to increasing the TFP of the economy, probably at lower cost and time.

Keywords

• productivity
• formal and informal firms
• peru