The Life Cycle of Plants in India and Mexico

Chang-Tai Hsieh and Pete Klenow

No 18133, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the U.S., the average 40 year old plant employs almost eight times as many workers as the typical plant five years or younger. In contrast, surviving Indian plants exhibit little growth in terms of either employment or output. Mexico is intermediate to India and the U.S. in these respects: the average 40 year old Mexican plant employs twice as many workers as an average new plant. This pattern holds across many industries and for formal and informal establishments alike. The divergence in plant dynamics suggests lower investments by Indian and Mexican plants in process efficiency, quality, and in accessing markets at home and abroad. In simple GE models, we find that the difference in life cycle dynamics could lower aggregate manufacturing productivity on the order of 25% in India and Mexico relative to the U.S.

JEL-codes: D24 O40 (search for similar items in EconPapers)
Date: 2012-06
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Published as "The Life Cycle of Manufacturing Plants in India and Mexico," Quarterly Journal of Economics, August 2014 (With Peter Klenow).

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Related works:
Journal Article: The Life Cycle of Plants in India and Mexico (2014)
Working Paper: The Life Cycle of Plants in India and Mexico (2012)
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