Abstract

http://ssrn.com/abstract=2365879
 


 



Size and Age of Establishments: Evidence from Developing Countries


Meghana Ayyagari


George Washington University - School of Business

Asli Demirgüç-Kunt


World Bank - Financial and Private Sector Development; World Bank

Vojislav Maksimovic


University of Maryland - Robert H. Smith School of Business

December 1, 2013

World Bank Policy Research Working Paper No. 6718

Abstract:     
Survey data from 120 developing countries are used to examine the relation between establishment size and age in the formal sector. Existing research suggests that manufacturing establishments in developing countries do not grow over time, most likely because of market imperfections and regulations. To the contrary, this paper finds that the average plant in developing countries that is more than 40 years old employs almost five times as many workers as the average plant that is five years old or younger. The analysis finds consistent evidence when it looks within a large country, India, based on detailed manufacturing census data over 23 years. It also finds that differences in financial development across Indian states, while substantial, have a minor effect on firm growth, consistent with inefficiency of state-owned financial systems. These results hold controlling for differences in labor regulations across states, capital intensity, labor regulations, and firms born before and after the major reforms.

Number of Pages in PDF File: 77

Keywords: Microfinance, Banks & Banking Reform, Scientific Research & Science Parks, Science Education, Labor Markets

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Date posted: December 10, 2013  

Suggested Citation

Ayyagari, Meghana and Demirgüç-Kunt, Asli and Maksimovic, Vojislav, Size and Age of Establishments: Evidence from Developing Countries (December 1, 2013). World Bank Policy Research Working Paper No. 6718. Available at SSRN: http://ssrn.com/abstract=2365879

Contact Information

Meghana Ayyagari (Contact Author)
George Washington University - School of Business ( email )
Washington, DC 20052
United States
Asli Demirgüç-Kunt
World Bank - Financial and Private Sector Development ( email )
United States
202-473-7479 (Phone)
202-522-1155 (Fax)
HOME PAGE: http://econ.worldbank.org/staff/ademirguckunt/
World Bank ( email )
1818 H Street, NW
Washington, DC 20433
United States
Vojislav Maksimovic
University of Maryland - Robert H. Smith School of Business ( email )
Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)
HOME PAGE: http://www.rhsmith.umd.edu/finance/vmax/
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