If Colombia wants to increase productivity in the country, then it needs policies that help high-productivity companies invest in research and development to innovate. According to research conducted by Álvaro Pinzón, a PhD candidate with the Department of Economics, there is a place for government to support innovation by removing barriers to investment in R&D, especially in high-productivity firms.

“The main finding of my paper is that in Colombia’s manufacturing industry, firms are not allocating R&D resources efficiently. There are ways to allocate those resources better, and by doing so, the aggregate productivity in the country and the aggregate output will increase by a huge percentage,” said Pinzón. “We have resources. Why are we not catching up? One answer is allocation. We need to reduce the distortions that prevent that efficient allocation from happening.” [Read more…]