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Corporate Stability and Economic Growth

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  • Bernard Yeung
  • Kathy S. He
  • Randall Morck

Abstract

Greater instability in a country's list of top corporations is associated with faster economic growth. This faster growth is primarily due to faster growth in total factor productivity in industrialized countries, and faster capital accumulation in developing countries. These findings are consistent with the view that economic growth is more closely tied to the rise of new large firms than to the prosperity of established large firms. Although a stable list of leading corporations is highly correlated with government size, it is unrelated to other possible policy goals, such as (successful) income equalization and avoiding economic crises, it is related to other political factors. However, the list of top firms is more stable in countries with fewer rights for creditors in bankruptcy and with bank-based rather than stock market-based financial systems. These findings appear to oppugn arguments of the form “What’s good for General Motors is good for America”. We propose that political rent-seeking by large established firms underlies increased corporate stability

Suggested Citation

  • Bernard Yeung & Kathy S. He & Randall Morck, 2004. "Corporate Stability and Economic Growth," Econometric Society 2004 North American Winter Meetings 84, Econometric Society.
  • Handle: RePEc:ecm:nawm04:84
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    Cited by:

    1. Perotti, Enrico C & Volpin, Paolo, 2004. "Lobbying on Entry," CEPR Discussion Papers 4519, C.E.P.R. Discussion Papers.
    2. repec:wsi:serxxx:v:54:y:2009:i:03:n:s0217590809003379 is not listed on IDEAS
    3. Kinda, Tidiane & Plane, Patrick & Veganzones-Varoudakis, Marie-Ange, 2009. "Firms'productive performance and the investment climate in developing economies : an application to MENA manufacturing," Policy Research Working Paper Series 4869, The World Bank.
    4. Christoph Walkner, 2004. "Issues in corporate governance," European Economy - Economic Papers 2008 - 2015 200, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    5. Escribano, Alvaro & Guasch, J. Luis, 2005. "Assessing the impact of the investment climate on productivity using firm-level data : methodology and the cases of Guatemala, Honduras, and Nicaragua," Policy Research Working Paper Series 3621, The World Bank.
    6. Michael R. Darby & Lynne G. Zucker, 2006. "Innovation, Competition and Welfare-Enhancing Monopoly," NBER Working Papers 12094, National Bureau of Economic Research, Inc.
    7. Tidiane KINDA & Patrick PLANE & Marie-Ange VEGANZONES-VAROUDAKIS, 2008. "Firm-Level Productivity and Technical Efficiency in MENA Manufacturing Industry: The Role of the Investment Climate," Working Papers 200819, CERDI.
    8. Enrico Perotti & Paolo Volpin, 2007. "Investor Protection and Entry," Tinbergen Institute Discussion Papers 07-006/2, Tinbergen Institute.
    9. Peter Hogfeldt, 2004. "The History and Politics of Corporate Ownership in Sweden," NBER Working Papers 10641, National Bureau of Economic Research, Inc.
    10. Morck, Randall & Yeung, Bernard, 2001. "Japanese Economic Success and the Curious Characteristics of Japanese Stock Prices," CEI Working Paper Series 2001-19, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    11. Formby, John P. & Smith, W. James & Zheng, Buhong, 2004. "Mobility measurement, transition matrices and statistical inference," Journal of Econometrics, Elsevier, vol. 120(1), pages 181-205, May.
    12. Hyunbae Chun & Jung-Wook Kim & Jason Lee & Randall Morck, 2004. "Patterns of Comovement: The Role of Information Technology in the U.S. Economy," NBER Working Papers 10937, National Bureau of Economic Research, Inc.
    13. Escribano, Álvaro & Guasch, J. Luis & Orte, Manuel De & Pena, Jorge, 2008. "Investment climate assessment based on demean Olley and Pakes decompositions: methodology and application to Turkey's investment climate survey," UC3M Working papers. Economics we082012, Universidad Carlos III de Madrid. Departamento de Economía.
    14. Tidiane Kinda & Patrick Plane & Marie-Ange Veganzones-Varoudakis, 2009. "Productivity and Investment Climate in Developing Countries: How Do MENA Industries Perform?," Working Papers 476, Economic Research Forum, revised Mar 2009.
    15. Peter Hogfeldt, 2005. "The History and Politics of Corporate Ownership in Sweden," NBER Chapters,in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 517-580 National Bureau of Economic Research, Inc.

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    Keywords

    Corporate Stability and Economic Growth;

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