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

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

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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  1. Andrei A. Levchenko & Julian di Giovanni & Romain Ranciere, 2010. "Power Laws in Firm Size and Openness to Trade: Measurement and Implications," IMF Working Papers 10/109, International Monetary Fund.
  2. Daron Acemoglu & Dan Vu Cao, 2010. "Innovation by Entrants and Incumbents," NBER Working Papers 16411, National Bureau of Economic Research, Inc.
  3. Diego Restuccia & Richard Rogerson, 2007. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Working Papers tecipa-283, University of Toronto, Department of Economics.
  4. Rachel Griffith & Rupert Harrison & John Van Reenen, 2004. "How special is the special relationship? Using the impact of US R&D spillovers on UK firms as a test of technology sourcing," IFS Working Papers W04/32, Institute for Fiscal Studies.
  5. Paula Bustos, 2011. "Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms," American Economic Review, American Economic Association, vol. 101(1), pages 304-40, February.
  6. Andrew Atkeson & Ariel Burstein, 2010. "Innovation, firm dynamics, and international trade," Staff Report 444, Federal Reserve Bank of Minneapolis.
  7. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
  9. repec:tpr:qjecon:v:122:y:2007:i:3:p:1103-1144 is not listed on IDEAS
  10. Johannes Van Biesebroeck, 2003. "Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants," NBER Working Papers 10020, National Bureau of Economic Research, Inc.
  11. De Loecker, Jan, 2007. "Do exports generate higher productivity? Evidence from Slovenia," Journal of International Economics, Elsevier, vol. 73(1), pages 69-98, September.
  12. Daniel Trefler, 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement," American Economic Review, American Economic Association, vol. 94(4), pages 870-895, September.
  13. 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, number 581, June.
  14. Rubini, Loris, 2009. "Innovation and the Elasticity of Trade Volumes to Tariff Reductions," MPRA Paper 21484, University Library of Munich, Germany.
  15. Yeaple, Stephen Ross, 2005. "A simple model of firm heterogeneity, international trade, and wages," Journal of International Economics, Elsevier, vol. 65(1), pages 1-20, January.
  16. Carlo Altomonte & Tommaso Aquilante & Gianmarco Ottaviano, . "The triggers of competitiveness: The EFIGE cross-country report," Blueprints, Bruegel, number 738, June.
  17. Thierry Mayer & Gianmarco Ottaviano, 2008. "The Happy Few: The Internationalisation of European Firms," Intereconomics: Review of European Economic Policy, Springer, vol. 43(3), pages 135-148, May.
  18. repec:tpr:qjecon:v:125:y:2010:i:3:p:1051-1099 is not listed on IDEAS
  19. 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.
  20. Erzo G. J. Luttmer, 2010. "Models of Growth and Firm Heterogeneity," Working Papers 2010-1, University of Minnesota, Department of Economics.
  21. Fabiano Schivardi & Roberto Torrini, 2003. "Firm Size Distribution and EPL in Italy," William Davidson Institute Working Papers Series 2003-613, William Davidson Institute at the University of Michigan.
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