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Firm dynamics and productivity growth

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  • Haltiwanger, John

    ()
    (University of Maryland)

Abstract

Countries differ substantially in the extent to which more productive firms are large and/or are becoming larger and less productive firms are small and/or becoming smaller. A challenge for both emerging and advanced economies is that achieving such static and dynamic allocative efficiency requires an ongoing process of restructuring and reallocation. Such restructuring and reallocation is by its very nature costly. Market structure and institutions that promote well-functioning business dynamism are, accordingly, critical for economic performance. In the 1980s abd 1990s, the US exhibited a robust pace of business dynamism that contributed substantially to US productivity and job growth. There are, however, some disturbing trends in the nature of US business dynamism - for example, the pace of business start-ups has declined secularly especially over the last decade. The decline in the pace of business dynamism may be contributing to the anaemic US recovery from the recent recession.

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Bibliographic Info

Paper provided by European Investment Bank, Economics Department in its series EIB Papers with number 5/2011.

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Length: 21 pages
Date of creation: 16 Dec 2011
Date of revision:
Handle: RePEc:ris:eibpap:2011_005

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Related research

Keywords: Productivity; Job Creation; Business Start-Ups;

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References

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Citations

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Cited by:
  1. Casey Ichniowski & Kathryn L. Shaw, 2009. "Insider Econometrics: Empirical Studies of How Management Matters," NBER Working Papers 15618, National Bureau of Economic Research, Inc.
  2. Klaus Friesenbichler, 2013. "Firm Growth in Conflict Countries: Some Evidence from South Asia," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 33-44, May.
  3. Giorgio Calcagnini & Annalisa Ferrando & Germana Giombini, 2013. "Multiple Market Imperfections, Firm Profitability and Investment," Working Papers 1305, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
  4. Lopez-Garcia, Paloma & di Mauro, Filippo & Benatti, Nicola & Angeloni, Chiara & Altomonte, Carlo & Bugamelli, Matteo & D’Aurizio, Leandro & Navaretti, Giorgio Barba & Forlani, Emanuele & Rossetti, S, 2014. "Micro-based evidence of EU competitiveness: the CompNet database," Working Paper Series 1634, European Central Bank.

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