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Entry, Exit, and Aggregate Productivity Growth: Micro Evidence on Korean Manufacturing

Author

Listed:
  • Chin Hee Hahn

Abstract

Using plant level panel data on Korean manufacturing during the 1990-98 period, this study tries to assess the role of entry and exit in enhancing aggregate productivity, both qualitatively and quantitatively. The main findings of this study are summarised as follows. First, plant entry and exit rates in Korean manufacturing seem quite high: they are higher than in both the United States and several developing countries for which comparable studies exist. Second, in line with existing studies on other countries, plant turnover reflects underlying productivity differentials in Korean manufacturing, with the “shadow of death” effect as well as selection and learning effects all present. Third, plant entry and exit account for as much as 45 and 65 per cent in manufacturing productivity growth during cyclical upturn and downturn, respectively. This study also shows that plant birth and death are mainly a process of resource reallocation from plants with relatively low and declining ... Cette étude essaie de déterminer le rôle des entrées et sorties des firmes dans l’amélioration de la productivité globale, à la fois qualitativement et quantitativement, en utilisant des données de panel dans le secteur manufacturier coréen au niveau des installations industrielles durant la période 1990-98. Les conclusions de l’étude se résument comme suit : premièrement, les taux des entrées et sorties des firmes au niveau des installations dans le secteur manufacturier coréen semblent assez élevés. Ils sont plus élevés qu’aux États-Unis et dans plusieurs pays en voie de développement pour lesquels des études comparables existent. Deuxièmement, en accord avec des études existantes sur d’autres pays, la dynamique industrielle est le produit des différentiels de productivité sous-jacents dans le secteur manufacturier coréen ; l’effet “ombre de la mort” ainsi que les effets de sélection et d’apprentissage sont également présents. Troisièmement, les entrées et sorties représentent jusqu’à 45 et 65 pour cent de la croissance de la productivité manufacturière, respectivement, au ...

Suggested Citation

  • Chin Hee Hahn, 2000. "Entry, Exit, and Aggregate Productivity Growth: Micro Evidence on Korean Manufacturing," OECD Economics Department Working Papers 272, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:272-en
    DOI: 10.1787/656402673613
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    Citations

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    Cited by:

    1. Kevin Fox, 2012. "Problems with (dis)aggregating productivity, and another productivity paradox," Journal of Productivity Analysis, Springer, vol. 37(3), pages 249-259, June.
    2. Frances Ruane & Ali Ugur, 2005. "Labour Productivity and Foreign Direct Investment in Irish Manufacturing Industry - A Decomposition Analysis," The Economic and Social Review, Economic and Social Studies, vol. 36(1), pages 19-43.
    3. Philippe Aghion & Sergei Guriev & Kangchul Jo, 2021. "Chaebols and firm dynamics in Korea [Distance to frontier, selection, and economicgrowth]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 36(108), pages 593-626.
    4. Kyoji Fukao & Tomohiko Inui & Hiroki Kawai & Tsutomu Miyagawa, 2004. "Sectoral Productivity and Economic Growth in Japan, 1970-98: An Empirical Analysis Based on the JIP Database," NBER Chapters, in: Growth and Productivity in East Asia, pages 177-228, National Bureau of Economic Research, Inc.
    5. Inha Oh & Almas Heshmati & Chulwoo Baek & Jeong‐Dong Lee, 2009. "Comparative Analysis Of Plant Dynamics By Size: Korean Manufacturing," The Japanese Economic Review, Japanese Economic Association, vol. 60(4), pages 512-538, December.
    6. Wojciech Rogowski & Jacek Socha, 2008. "Business Demography, Job Flows and Productivity in Poland’s Enterprise Sector," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 1-23.
    7. Sanghoon Ahn, 2004. "Global Competition, Technology Spillovers and Firm Dynamics:," Econometric Society 2004 Far Eastern Meetings 793, Econometric Society.
    8. Hahn, Chin-hee & Lim, Youngjae, 2002. "Post-Crisis Growth and Bankruptcy Policy Reform in Korea: Empirical Evidence," KDI Policy Studies 2002-01, Korea Development Institute (KDI).
    9. Chiara Tomasi & Fabio Pieri & Valentina Cecco, 2023. "Red tape and industry dynamics: a cross-country analysis," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(2), pages 283-320, June.
    10. Michele Cincera, 2004. "Impact of market entry and exit on EU productivity and growth performance," ULB Institutional Repository 2013/921, ULB -- Universite Libre de Bruxelles.
    11. Asma Raies, 2013. "Firm entry and aggregate efficiency growth: An optimal dynamic - Program of entry and R&D investment," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(3), pages 355-376, December.
    12. Sanghoon Ahn & Kyoji Fukao & Hyeog Ug Kwon, 2005. "The Internationalization and Performance of Korean and Japanese Firms: An Empirical Analysis Based on Micro-data," Discussion papers 05008, Research Institute of Economy, Trade and Industry (RIETI).
    13. repec:spo:wpecon:info:hdl:2441/7186 is not listed on IDEAS
    14. Keun Rhee & Hak Pyo, 2010. "Financial crisis and relative productivity dynamics in Korea: evidence from firm-level data (1992–2003)," Journal of Productivity Analysis, Springer, vol. 34(2), pages 111-131, October.
    15. repec:spo:wpmain:info:hdl:2441/7185 is not listed on IDEAS
    16. Flora Bellone & Patrick Musso & Michel Quéré & Lionel Nesta, 2006. "Productivity and Market Selection of French Manufacturing Firms in the Nineties," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 319-349.
    17. Fethi AMRI & Rim MOUELHI, 2013. "Productivity Growth And Competition In Tunisian Manufacturing Firms," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 37, pages 37-64.
    18. Ergun Dogan & Koi Nyen Wong, 2010. "Plant Size, Turnover and Productivity in Malaysian Manufacturing," Monash Economics Working Papers 11-10, Monash University, Department of Economics.
    19. Yojiro Ito & Daisuke Miyakawa, 2022. "Performance of Exiting Firms in Japan: An Empirical Analysis Using Exit Mode Data," IMES Discussion Paper Series 22-E-07, Institute for Monetary and Economic Studies, Bank of Japan.
    20. Tran Quoc Trung & Nguyen Thanh Tung & Tran Duy Dong & Phan Hoai Duong, 2008. "Performance of export-oriented small and medium-sized manufacturing enterprises in Viet Nam," Working Papers 5408, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    21. Nishimura, Kiyohiko G. & Nakajima, Takanobu & Kiyota, Kozo, 2005. "Does the natural selection mechanism still work in severe recessions?: Examination of the Japanese economy in the 1990s," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 53-78, September.
    22. repec:spo:wpmain:info:hdl:2441/7186 is not listed on IDEAS
    23. Mao, Qilin & Sheng, Bin, 2017. "The impact of tariff reductions on firm dynamics and productivity in China: Does market-oriented transition matter?," China Economic Review, Elsevier, vol. 45(C), pages 168-194.
    24. repec:spo:wpecon:info:hdl:2441/7185 is not listed on IDEAS
    25. A.A. Sennikova & A.A. Pushakrev, 2020. "Evaluation of the Level of Competition in Ukraine in Industrial Production Industries," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 19(1), pages 40-59.

    More about this item

    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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