Impeded Industrial Restructuring: The Growth Penalty
31 Pages Posted: 29 Jan 2001
Date Written: December 2000
Abstract
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.
Keywords: Economic Growth, Entrepreneurship, Firm Size Distribution, Industry Structure
JEL Classification: L11, O11
Suggested Citation: Suggested Citation
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