Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries

TY - UNPB

T1 - Sector Switching

T2 - An Unexplored Dimension of Firm Dynamics in Developing Countries

AU - Newman, Carol

AU - Rand, John

AU - Tarp, Finn

N1 - JEL Classification: D21, L6, O14

PY - 2007

Y1 - 2007

N2 - Much of the literature on industry evolution has found firm dynamics to be an important source of sector-level productivity growth. In this paper, we ask whether the delineation of entry and exit firms matters in assessing the impact of firm turnover. Using detailed firm level data from Vietnam, it emerges that efficiency differences between sector switchers and exit/entry firms exist. Distinguishing between switchers and firm entry/exit is crucial for understanding the contribution of firm turnover to overall productivity growth. Moreover, we uncover distinct and illuminating firm and sector-level determinants of firm exit and switching, which need to be carefully considered in the search for effective policy

AB - Much of the literature on industry evolution has found firm dynamics to be an important source of sector-level productivity growth. In this paper, we ask whether the delineation of entry and exit firms matters in assessing the impact of firm turnover. Using detailed firm level data from Vietnam, it emerges that efficiency differences between sector switchers and exit/entry firms exist. Distinguishing between switchers and firm entry/exit is crucial for understanding the contribution of firm turnover to overall productivity growth. Moreover, we uncover distinct and illuminating firm and sector-level determinants of firm exit and switching, which need to be carefully considered in the search for effective policy

KW - Faculty of Social Sciences

KW - firm dynamics

KW - sector switching

KW - efficiency

KW - Vietnam

M3 - Working paper

BT - Sector Switching

PB - Department of Economics, University of Copenhagen

ER -