generating endogenous changes in local productivity. In this paper, we document and quantify the importance of this channel by … delays in the construction of highways, we empirically show that productivity grows in places with better transportation … total factor productivity. Then, by calibrating our model on census data between 1998 and 2018, we find that new highways …

We argue that greater misallocation is a key driver of the worse management practices in Mexico compared to the US …. These management practices are strongly associated with higher productivity, growth, trade, and innovation. One indicator of … greater misallocation in Mexico is the weaker size-management relationship compared to the US, particularly in the highly …