Industrial capacity utilization in Colombia, some empirical findings

The importance of the capital-labor ratio as an explanatory variable suggests that a change in labor laws that impose a night shift wage differential can increase capacity utilization inasmuch as the difference in wage ratio is caused by the law and not by the workers" preferences for daytime work. The importance of the market share in the utilization of capacity suggests a change in policy that could be implemented in the long run. Due to the small size of the domestic market, it might be better to have a controlled monopoly than an oligopoly. Therefore, competition among few firms should not necessarily be preferred over monopoly when deciding the investment policies of the country. This study lacks data on exports by the firm, but the importance of the sector dummy variables, especially textiles, suggests that a policy of fostering exports could result in an increase in capacity utilization.