As the market churns: productivity and firm exit in developing countries
Gemechu Aga and
David Francis ()
Small Business Economics, 2017, vol. 49, issue 2, No 7, 379-403
Abstract This paper uses a unique dataset from the World Bank’s Enterprise Surveys in 47 economies to analyze the conditions under which firms leave heterogeneous markets. Consistent with expectations, we show that firm productivity (and age) are significant determinants of firm exit. Cross-country analysis shows, however, that the relationship between productivity as well as age and exit is mitigated by some country-level factors. In particular, we show either’s effect is substantially weakened in low-income economies, economies with limited openness to international trade, and in economies with cumbersome bankruptcy procedures. To address issues of sample attrition and selection bias presented by survey-based estimates, corrections are applied using information when a firm’s operating status is uncertain. The expected negative relationship between firm labor productivity and the likelihood of exit is robust to these corrections, as is the negative relationship between firm exit and age.
Keywords: Firm exit; Business environment; Survey attrition; J24; D22; K20; C81 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11187-016-9817-7 Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-016-9817-7
Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2
Access Statistics for this article
Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch
More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().