Creative destruction and regional productivity growth: evidence from the Dutch manufacturing and services industries
Do processes of firm entry and exit improve the competitiveness of regions? If so, is this a universal mechanism or is it contingent on the type of industry or region in which creative destruction takes place? This paper analyses the effect of firm entry and exit on the competitiveness of regions, measured by Total Factor Productivity (TFP) growth. Based on a study across 40 regions in the Netherlands over the period 1988-2002, we find that firm entry is related to productivity growth in services, but not in manufacturing. The positive impact found in services does not necessarily imply that new firms are more efficient than incumbent firms; high degrees of creative destruction may also improve the efficiency of incumbent firms. We also find that the impact of firm dynamics on regional productivity in services is higher in regions exhibiting diverse but related economic activities.
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Volume (Year): 36 (2011)
Issue (Month): 4 (May)
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References listed on IDEAS
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- Mark Doms & Eric J. Bartelsman, 2000.
"Understanding Productivity: Lessons from Longitudinal Microdata,"
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- Eric J. Bartelsman & Mark Doms, 2000. "Understanding productivity: lessons from longitudinal microdata," Finance and Economics Discussion Series 2000-19, Board of Governors of the Federal Reserve System (U.S.).
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- Audretsch, D.B. & Klomp, L. & Thurik, A.R., 2002. "Gibrat's Law: are the services different?," ERIM Report Series Research in Management ERS-2002-04-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
- Roy Thurik & Enrico Santarelli & David Audretsch & Luuk Klomp, 2002. "Gibrat's Law: Are the Services Different?," Scales Research Reports H200201, EIM Business and Policy Research.
- Marcus Dejardin, 2011. "Linking net entry to regional economic growth," Small Business Economics, Springer, vol. 36(4), pages 443-460, May.
- Eric J. Bartelsman, 2004. "Firm Dynamics and Innovation in the Netherlands A comment on Baumol," De Economist, Springer, vol. 152(3), pages 353-363, 09. Full references (including those not matched with items on IDEAS)
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