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Breaking down the barriers to firmgrowth in Europe The fourth EFIGE policy report

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Author Info

  • Loris Rubini
  • Klaus Desmet
  • Facundo Piguillem
  • Aranzazu Crespo

Abstract

Large firms contribute disproportionately to the economic performance of countries: they are more productive, pay higher wages, enjoy higher profits and are more successful in international markets. The differences between European countries in terms of the size of their firms are stark. Firms in Italy and Spain, for example, are on average 40 percent smaller than firms in Germany. The low average firm size translates into a chronic lack of large firms. In Italy and Spain, a mere 5 percent of manufacturing firms have more than 250 employees, compared to a much higher 11 percent in Germany. Understanding the roots of these differences is key to improving the economic performance of Europeâ??s lagging economies. So why is there so much variation in firm size in different European countries? What are the barriers that keep firms in some countries from growing? And which policies are likely to be most effective in breaking down those barriers? This policy report aims to answer these questions by developing a quantitative model of the seven European countries covered by the EFIGE survey (Austria, France, Germany, Hungary, Italy, Spain and the UK). The EFIGE survey asked 14,444 firms in those countries about their performance, their modes of internationalisation, their staffing decisions, their financing structure, and their competitive environment, among other topics.

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This book is provided by Bruegel in its series Blueprints with number 744 and published in .

Handle: RePEc:bre:bluprt:744

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References

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  1. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
  2. Loris Rubini, 2010. "Innovation and the Elasticity of Trade Volumes to Tariff Reductions," 2010 Meeting Papers, Society for Economic Dynamics 570, Society for Economic Dynamics.
  3. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, American Economic Association, vol. 101(1), pages 304-40, February.
  4. Alla Lileeva & Daniel Trefler, 2007. "Improved Access to Foreign Markets Raises Plant-Level Productivity ... for Some Plants," NBER Working Papers 13297, National Bureau of Economic Research, Inc.
  5. Andrew Atkeson & Ariel Tomás Burstein, 2010. "Innovation, Firm Dynamics, and International Trade," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 118(3), pages 433-484, 06.
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  9. Carlo Altomonte & Tommaso Aquilante & Gianmarco Ottaviano, . "The triggers of competitiveness: The EFIGE cross-country report," Blueprints, Bruegel, Bruegel, number 738, December.
  10. Dan Cao and Daron Acemoglu, 2010. "Innovation by Entrants and Incumbents," Working Papers, Georgetown University, Department of Economics gueconwpa~10-10-06, Georgetown University, Department of Economics.
  11. Daniel Trefler, 2001. "The Long and Short of the Canada-U.S. Free Trade Agreement," NBER Working Papers 8293, National Bureau of Economic Research, Inc.
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  13. Van Biesebroeck, Johannes, 2005. "Exporting raises productivity in sub-Saharan African manufacturing firms," Journal of International Economics, Elsevier, Elsevier, vol. 67(2), pages 373-391, December.
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  15. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, Elsevier, vol. 65(1), pages 1-20, January.
  16. Erzo G. J. Luttmer, 2010. "Models of Growth and Firm Heterogeneity," Working Papers, University of Minnesota, Department of Economics 2010-1, University of Minnesota, Department of Economics.
  17. Erzo G. J. Luttmer, 2007. "Selection, Growth, and the Size Distribution of Firms," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(3), pages 1103-1144, 08.
  18. Giorgio Barba Navaretti & Matteo Bugamelli & Fabiano Schivardi & Carlo Altomonte & Daniel Horgos & Daniela Maggioni, . "The global operations of European firms - The second EFIGE policy report," Blueprints, Bruegel, Bruegel, number 581, December.
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Citations

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Cited by:
  1. Facundo Piguillem & Loris Rubini, 2013. "Barriers to Firm Growth in Open Economies," EIEF Working Papers Series 1304, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2013.
  2. Carlo Altomonte & Tommaso Aquilante & Gábor Békés & Gianmarco I. P. Ottaviano, 2014. "Internationalization and Innovation of Firms: Evidence and Policy," CEP Special Papers, Centre for Economic Performance, LSE 032, Centre for Economic Performance, LSE.
  3. Henri Bogaert & Chantal Kegels, 2012. "Planning Paper 112 - Compétitivité de la Belgique - Défis et pistes de croissance
    [Planning Paper 112 - Concurrentievermogen van België - Uitdagingen en groeipistes]
    ," Planning Papers, Federal Planning Bureau, Belgium 112, Federal Planning Bureau, Belgium.
  4. Aranzazu Crespo & Marcel Jansen, 2014. "The Role of Global Value Chains during the Crisis: Evidence from Spanish and European Firms," Working Papers 2014-09, FEDEA.

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