Impeded Industrial Restructuring: The Growth Penalty
David B. Audretsch
Indiana University - Institute for Development Strategies; King Saud University; WHU - Otto Beisheim School of Management; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)
Martin A. Carree
University of Maastricht - Department of Organization & Strategy
Andre J. Van Stel
Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics
Erasmus University Rotterdam (EUR) - Centre for Advanced Small Business Economics (CASBEC); Erasmus Research Institute of Management (ERIM); EIM Netherlands - Business and Policy Research; Tinbergen Institute
CEPR Discussion Paper No. 2648
This paper documents that a process of industrial restructuring has been transforming the developed economies, where large corporations are accounting for less economic activity and small firms are accounting for a greater share of economic activity. Not all countries, however, are experiencing the same shift in their industrial structures. Very little is known about the cost of resisting this restructuring process. The goal of this paper is to identify whether there is a cost, measured in terms of foregone growth, of an impeded restructuring process. The cost is measured by linking growth rates of European countries to deviations from the optimal industrial structure. The empirical evidence suggests that countries impeding the restructuring process pay a penalty in terms of foregone growth.
Number of Pages in PDF File: 31
Keywords: Economic Growth, Entrepreneurship, Firm Size Distribution, Industry Structure
JEL Classification: L11, O11working papers series
Date posted: January 29, 2001
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