Latin America: Incorporating environmental factors into the measurement of production efficiency and technical change

This paper examines growth in a set of Latin American countries from 1980 to 2004 by analysing total factor productivity (tfp) from a twofold perspective: maximization of output (gdp) and minimization of the co2 emissions generated in the production process. Malmquist productivity indices are constructed for this purpose. In addition, kernel density functions are employed to analyse convergence (or divergence) in the efficiency estimated. The results obtained indicate that incorporating environmental factors into the measurement of efficiency and productive change significantly improves the estimates for certain countries in the region by comparison with those obtained by more traditional methods.