Do crises catalyze creative destruction ? firm-level evidence from Indonesia

Mary Hallward-Driemeier and Bob Rijkers

No 5869, Policy Research Working Paper Series from The World Bank

Abstract: Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and the crisis induced the exit of relatively productive firms. The attenuation of the relationship between productivity and survival was stronger in provinces with comparatively lower reductions in minimum wages, but not due to reduced entry, changing loan conditions, or firms connected to the Suharto regime suffering disproportionately. On the bright side, firms that entered during the crisis were relatively more productive, which helped mitigate the reduction in aggregate productivity.

Keywords: Labor Policies; Labor Markets; Banks&Banking Reform; Economic Theory&Research; Microfinance (search for similar items in EconPapers)
Date: 2011-11-01
New Economics Papers: this item is included in nep-dev and nep-sea
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Citations: View citations in EconPapers (10)

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Journal Article: Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:5869

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