TY  - JOUR
AU  - Blomstrom,Magnus
AU  - Wolff,Edward N.
TI  - Growth in a Dual Economy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4433
PY  - 1993
Y2  - August 1993
UR  - http://www.nber.org/papers/w4433
L1  - http://www.nber.org/papers/w4433.pdf
N1  - Author contact info:
Magnus Blomstrom
European Institute of Japanese Studies
Stockholm School of Economics
Post Office Box 6501, Sveavagen 65
S-113 83 Stockholm
 SWEDEN
Tel: 46-8-7369265
Fax: 46-8-313017
E-Mail: magnus.blomstrom@gmail.com

Edward N. Wolff
Department of Economics
New York University
19 W. 4th Street, 6th Floor
New York, NY  10012
Tel: 212/998-8917
Fax: 212/995-4186
E-Mail: edward.wolff@nyu.edu
AB  - Growth and structural transformation of the manufacturing sector in developing countries are generally considered to be the result of the expansion of the "modem" (large-scale) sector relative to the "traditional" (small-scale) sector. Examining the sources of labor productivity growth in Mexican manufacturing, however, does not provide support for such a conclusion. Although we find that labor productivity levels vary almost in direct relation to establishment size, labor productivity growth shows no systematic variation by size class. In fact, small establishments have had the same rate of labor productivity growth as larger ones, partly because of the "excise-effect" (i.e. the exiting of low-productivity, small plants). Moreover, most of the variation in labor productivity across plant class sizes is found to be due to differences in capital intensity. The variation in TFP levels across size classes tends to be small. Thus, our results remove some justification of the policy measures that favor large firms in developing countries.
ER  -