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Firm Dynamics and Aggregate Growth: The Case of Hungary

Author

Listed:
  • Péter Bauer

    (Magyar Nemzeti Bank)

  • Marianna Endrész

    (Magyar Nemzeti Bank)

Abstract

This paper reports some stylised facts on firm dynamics in Hungary for the period 2001–2015. We find that young firms tend to be small. They grow fast, but at the same time they are risky, have a high exit rate and their productivity is lower than that of older firms. Despite their small share in aggregate output, their contribution to aggregate growth is significant. Their dynamism comes from their young age rather than from their small size. Export performance is somewhat different, as older firms remain more active and make a significant contribution to aggregate growth. During the crisis, young firms still made a positive contribution to growth, but the deteriorating performance of older firms dominated the aggregate picture, because of their large share in production. The behaviour of firm groups by size and age varied during the crisis and the recovery. Interestingly, the recovery seems to be dominated by the lower-end of the distribution of firm population; destruction eased and fewer firms exited, but there was no recovery in gross creation. Firm entry kept falling even during the recovery period, which must have contributed to the sluggish, weak recovery.

Suggested Citation

  • Péter Bauer & Marianna Endrész, 2018. "Firm Dynamics and Aggregate Growth: The Case of Hungary," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 17(2), pages 68-98.
    • Handle: RePEc:mnb:finrev:v:17:y:2018:i:2:p:68-98
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    References listed on IDEAS

    as
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    Cited by:

    1. Krisztofer Szabo & Marta Aranyossy & Dora Barczy, 2022. "From University Student to Entrepreneur - Factors Influencing the Entrepreneurial Intentions of Business Development MSc Students," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 21(2), pages 125-151.

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    More about this item

    Keywords

    firm dynamics; firm life-cycle; crisis; economic growth; empirical analysis;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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