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Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries

Carol Newman (), John Rand () and Finn Tarp ()

Economic Papers from Trinity College Dublin, Economics Department

Abstract: Much of the literature on industry evolution has found firm dynamics to be an important source of sector-level productivity growth. In this paper, we ask whether the delineation of entry and exit firms matters in assessing the impact of firm turnover. Using detailed firm level data from Vietnam, it emerges that efficiency differences between sector switchers and exit/entry firms exist. Distinguishing between switchers and firm entry/exit is crucial for understanding the contribution of firm turnover to overall productivity growth. Moreover, we uncover distinct and illuminating firm and sector-level determinants of firm exit and switching, which need to be carefully considered in the search for effective policy.

Keywords: Firm dynamics; sector switching; efficiency; Vietnam (search for similar items in EconPapers)
JEL-codes: D21 L6 O14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff and nep-tid
Date: 2007-09
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http://www.tcd.ie/Economics/TEP/2007/TEP1007.pdf

Related works:
Working Paper: Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries (2007) Downloads
Working Paper: Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries (2007) Downloads
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