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Competition, Firm Turnover and Productivity Growth

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  • Baldwin, John R.
  • Gu, Wulong

Abstract

This paper investigates the extent to which productivity growth is the result of firm turnover as output is shifted from one firm to another, driven by the competitive process. Turnover occurs as some firms gain market share and others lose it. Some of the resulting turnover is due to entry and exit. Another part arises from growth and decline in incumbent continuing firms. This paper proposes a method for measuring the impact of firm turnover on productivity growth and shows that it is far more important than many previous empirical studies have concluded. It argues that firm turnover associated with competition is the main source of aggregate labour productivity growth in Canadian manufacturing industries.

Suggested Citation

  • Baldwin, John R. & Gu, Wulong, 2006. "Competition, Firm Turnover and Productivity Growth," Economic Analysis (EA) Research Paper Series 2006042e, Statistics Canada, Analytical Studies Branch.
  • Handle: RePEc:stc:stcp5e:2006042e
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Kim, Byung Woon & Park, Joonho & Youl Ko, Chang, 2013. "Cost allocation of WCDMA and wholesale pricing for mVoIP and data services," Telecommunications Policy, Elsevier, vol. 37(1), pages 35-47.
    3. Florian Noseleit, 2013. "Entrepreneurship, structural change, and economic growth," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 735-766, September.
    4. Andrew Sharpe, 2009. "Editor’s Overview," International Productivity Monitor, Centre for the Study of Living Standards, vol. 18, pages 1-2, Spring.
    5. John Stanley Metcalfe & Ronnie Ramlogan, 2006. "Creative Destruction and the Measurement of Productivity Change," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 373-397.
    6. Tomlin, Ben, 2014. "Exchange rate fluctuations, plant turnover and productivity," International Journal of Industrial Organization, Elsevier, vol. 35(C), pages 12-28.
    7. J. Stan Metcalfe & John Foster, 2010. "Evolutionary Growth Theory," Chapters,in: Handbook of Alternative Theories of Economic Growth, chapter 3 Edward Elgar Publishing.
    8. Ravi Balakrishnan, 2008. "Canadian Firm and Job Dynamics," IMF Working Papers 08/31, International Monetary Fund.

    More about this item

    Keywords

    Business performance and ownership; Economic accounts; Entry; exit; mergers and growth; Productivity accounts;

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