You Are Suffocating Me! Firm-Level Evidence on Crowding Out

Serhan Cevik

No 2019/080, IMF Working Papers from International Monetary Fund

Abstract: Literature on whether government spending crowds out or crowds in the private sector is large, but still without an unambiguous conclusion. Using firm-level data from Ukraine, this paper provides a granular empirical investigation to disentangle the impact of state-owned enterprises (SOEs) on private firm investment in Ukraine—a large transition economy. Controlling for firm characteristics and systematic differences across sectors, the results indicate that the SOE concentration in a given sector has a statistically significant negative effect on private fixed capital formation, and that the impact of SOEs is stronger in those industries in which SOEs have a more dominant presence. These findings imply that private firms operating in sectors with a high level of SOE concentration invest systematically less than businesses that are not competing directly with SOEs.

Keywords: WP; firm; firm level; so; firm FE; Fixed investment; state-owned enterprises; crowding-out effect; firm-level analysis; dataset consist; nonfinancial company; firm investment; SOE density; Private investment; Public enterprises; Government debt management; Revenue sharing; Global (search for similar items in EconPapers)
Pages: 15
Date: 2019-04-24
New Economics Papers: this item is included in nep-cis
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Journal Article: You are suffocating me: Firm-level analysis of state-owned enterprises and private investment (2020)
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