Productivity growth and inefficient firms' exit from the market

Evguenia Bessonova and Anna Tsvetkova

Journal of the New Economic Association, 2020, vol. 48, issue 4, 185-196

Abstract: Many industries of the Russian economy show lower productivity at the aggregated level than in advanced countries. The low productivity level is in large part due to the widening efficiency gap between leader companies and a large group of low productive firms in individual industries. Among low productive firms, the catching-up impulse is concentrated in a small group of young and fast growing companies. In recent years, the number of such companies has not been large enough to scale down the heterogeneity of productivity. If the scarring effect of the crisis provoked by the coronavirus pandemic dominates the Russian economy and number of start-ups with growth potential decreases, this will aggravate the problem of already existing heterogeneity of productivity across firms and the lack of catching-up growth of most low productive companies. Acceleration of productivity growth requires coordinated economic policy fostering competition; improving people's education level and labour mobility; Russian companies' entry in foreign markets and integration in value chains; firms' exit from the informal sector; innovation and adaptation of new technologies; access to finance, especially for SMEs.

Keywords: creative destruction; productivity gap; convergence (search for similar items in EconPapers)
JEL-codes: D24 E22 O47 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2020:i:48:p:185-196

DOI: 10.31737/2221-2264-2020-48-4-8

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