Business Dynamics and Productivity

226 Pages·2017·4.5 MB·English

by  Organization for Economic Cooperation and Development

Business Dynamics and Productivity
This publication focuses on business dynamics across eight countries (Belgium, Brazil, Canada, Costa Rica,
Japan, New Zealand, Norway, United Kingdom) and over time, building upon the evidence collected in the
framework of the OECD DynEmp project for 22 countries. It provides new evidence on firms’ heterogeneous
responses to shocks (notably the recent financial crisis) in order to evaluate how policies and framework
Business Dynamics
conditions across different firms and countries can foster both employment and productivity growth.
and Productivity
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Business Dynamics
and Productivity
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PREFACE
Preface
A
dynamic business environment plays an important role not only as a key driver of job
creation but also as an engine of productivity growth. A growing body of research
highlights significant differences in business dynamics across countries and over time, in
particular over the different phases of the business cycle. However, our understanding of
these differences remains patchy, and this makes it more difficult for policy makers to
implement economically efficient policies.
This collection of studies aims to fill this gap by providing new evidence on business
dynamics from a cross-section of countries of different sizes, with different market and
structural characteristics, and which are at different stages in their development process.
The studies focus in particular on Belgium, Brazil, Canada, Costa Rica, Japan, New Zealand,
Norway and the United Kingdom, shedding new light on how firms which differ in terms
of their size, age, sector and other characteristics, respond to economic shocks, with a
particular focus on differences in their responses to the last decade’s global financial crisis.
Evidence collected in this volume also aims to provide a better understanding of the
contribution of business dynamics to aggregate productivity and of the effects of economic
policies across different firms and countries. Thus, it will help policy makers design better
policies, harnessing productivity and employment growth in support of more inclusive and
sustainable societies.
The work presented here is part of a broader effort by the OECD to provide evidence on
business dynamics and productivity from firm-level data, drawing on a variety of
methodologies. In particular, the OECD is leading two projects – DynEmp and MultiProd –
that use countries’ representative firm-level data to conduct comparable cross-country
analysis on employment dynamics and productivity. This study draws on the insights of
this research, providing not only cross-country comparability but also the opportunity to
dig deeper than aggregate or sectoral averages to uncover differences across firms, describe
productivity and employment distributions, and analyse heterogeneous impacts of
policies. At the leading edge of these new approaches, the OECD has a valuable role to play
in helping to strengthen the empirical analysis in support of better policies.
The pages which follow are an important step in that direction, which leverages the
expertise of the DynEmp and MultiProd network members. This collaborative and forward-
looking work will help policymakers design better policies by harnessing productivity and
employment growth in support of more inclusive and sustainable societies.
Angel Gurría
OECD Secretary-General
BUSINESS DYNAMICS AND PRODUCTIVITY © OECD 2017 3

FOREWORD
Foreword
T
his volume is part of a wider effort led by the OECD Directorate for Science, Technology and
Innovation to provide new cross-country evidence on employment dynamics and productivity based on
firm-level micro-data. In this context, the OECD is co-ordinating two distributed micro-data projects
– DynEmp and MultiProd – that rely on micro-aggregated data from a broad cross-section of countries
for comparable cross-country analyses on employment dynamics and productivity, respectively (see
www.oecd.org/sti/DynEmp.htm and www.oecd.org/sti/ind/MultiProd.htm). The innovative
methodology applied by the OECD allows for the collection and analysis of harmonised data based on
confidential administrative sources or official representative surveys. Both DynEmp and MultiProd rely
on the active participation of a network of national experts who have expertise in these different areas
and who have access to the relevant micro-data sources in their respective countries.
The projects allow for the assessment of the effects of national policies and framework conditions
on different firm-level outcomes. On the one hand, the cross-country dimension of the project overcomes
one of the great shortcomings of studies which rely on data from a single country, namely the relatively
limited variation in policy settings. On the other hand, unlike cross-country studies that concentrate on
outcomes at higher levels of aggregation, the methodology allows for the analysis of the heterogeneous
responses of different economic actors to the very same policy settings. The OECD has a particularly
important role to play in helping to bridge this gap. The distributed micro-data approach offers a
unique chance for building and exploiting longitudinal databases, and for going beyond cross-sectional
cross-country comparisons or aggregate industry-level analysis. In this framework, DynEmp and
MultiProd allow for the generation of data suitable for analysing specific economic policy questions at
different levels of aggregation (sectoral, geographical, or based on the size and age of firms).
However, DynEmp and MultiProd, by their very nature and to ensure comparability, have to
combine the availability of data in the majority of the participating countries with a shared interest in
the policy questions under investigation. For this reason, this book builds upon the great expertise of the
DynEmp network’s members in order to push further the boundaries of the DynEmp project, focusing on
three different directions: data needs, methodology, and – most importantly – policy questions.
BUSINESS DYNAMICS AND PRODUCTIVITY © OECD 2017 5
ACKNOWLEDGEMENTS
Acknowledgements
T
his volume was edited by Chiara Criscuolo from the OECD Directorate for Science,
Technology and Innovation, who also authored Chapter 1.
Danilo Coelho, Carlos Henrique Corseuil, and Miguel Nathan Foguel from the Instituto
de Pesquisa Econômica Aplicada (IPEA) wrote Chapter 2, with research assistance from
Luciana Costa and Katcha Poloponsky.
Michel Dumont, Chantal Kegels, Hilde Spinnewyn and Dirk Verwerft from the Belgian
Federal Planning Bureau are the authors of Chapter 3.
The authors of Chapter 4 are Michael Anyadike-Danes and Mark Hart from the Enterprise
Research Centre and Aston Business School.
Chapter 5 was prepared by Richard Fabling, independent researcher, and David Maré
from the Motu Economic and Public Policy Research Centre in New Zealand.
Chapter 6 was authored by Catalina Sandoval, Francisco Monge, Tayutic Mena, Arlina
Gómez and David Mora from the Ministry of Foreign Trade of Costa Rica.
Jay Dixon, from the Department of Innovation, Science and Economic Development
Canada, authored Chapter 7, which benefitted from extensive comments by Pierre Therrien
from the same Department.
Chapter 8 was authored by Arvid Raknerund and Diana-Cristina Iancu from Statistics
Norway, and benefited from comments and suggestions from Thomas von Brasch,
Chiara Criscuolo, Carl Gjersem, Erik Storm and Nora Kirsten Sundvall.
Finally, Chapter 9 was written by Kenta Ikeuchi, from the Research Institute of Economy,
Trade and Industry (RIETI) in Japan.
The book benefited from the inputs of the OECD Secretariat, with special thanks going
to Flavio Calvino for his support throughout the production of the book. Isabelle Desnoyers-
James, Angela Gosmann, Fabienne Barrey and Elisaveta Gekova for provided statistical and
editorial support.
The DynEmp and MultiProd projects would have not been possible without the support
from the Committee for Industry, Innovation and Entrepreneurship (CIIE) and the Working
Party of Industry Analysis (WPIA), and the generous contributions from a network of
researchers and policy makers from around the globe. The table below lists them and their
institutions by country.
6 BUSINESS DYNAMICS AND PRODUCTIVITY © OECD 2017
ACKNOWLEDGEMENTS
Country National representative(s) Institution(s)
Australia Antonio Balaguer, Diane Braskic, David Hansell Department of Industry, Innovation and Science and Australian
Bureau of Statistics
Austria Werner Hoelzl, Jürgen Janger, Michael Peneder WIFO Institute (Austrian Institute of Economic Research)
Belgium Michel Dumont, Chantal Kegels, Hilde Spinnewyn Federal Planning Bureau
Brazil Carlos Henrique Leite Corseuil, Gabriel Lopes de Ulyssea, Instituto de Pesquisa Econômica Aplicada (IPEA)
Glaucia Estafânia de Sousa Ferreira, Alexandre Messa Peixoto
da Silva, Fernanda De Negri
Canada Pierre Therrien, Jay Dixon, Anne-Marie Rollin, John Baldwin, Industry Canada and Statistics Canada
Wulong Gu
Chile Antonio Martner Sota, Andrés Zahler Ministerio de Economía, Fomento y Turismo
China Keiko Ito, Kyosuke Kurita, Yoshihiro Hashiguchi Senshu University, Kwansei Gakuin University, OECD
Costa Rica Alonso Alfaro, David Bullon Patton, Arlina Gómez, Tayutic Mena, Central Bank of Costa Rica and Ministry of Foreign Trade
Francisco Monge
Denmark Dorte Høeg Koch, Morten Skov Poulsen Ministry for Business and Growth
Finland Mika Maliranta ETLA and Statistics Finland
France DynEmp and MultiProd teams OECD
Hungary Adrienn Szep Szollosine, Erzsebet Eperjesi Lindnerne, Gabor Katay, Central Bank of Hungary, Hungarian Central Statistical Office
Peter Harasztosi, Mihály Szoboszlai
Germany Anke Rink, Natalie Rosenski DESTATIS – Federal Statistical Office of Germany
Indonesia Keiko Ito, Kyosuke Kurita Senshu University, Kwansei Gakuin University
Italy Stefano Costa Italian National Institute of Statistics (ISTAT)
Japan Kyoji Fukao, Kenta Ikeuchi and Keiko Ito Hitotsubashi University, National Institute of Science and Technology
Policy and RIETI
Luxembourg Leila Peltier – Ben Aoun, Chiara Peroni, Umut Kilinc STATEC
Netherlands Michael Polder Statistics Netherlands (Centraal Bureau voor de Statistiek)
New Zealand Corey Allan, Lynda Sanderson, Richard Fabling Ministry of Business, Innovation and Employment, independent
researcher, Motu Economic and Public Policy Research Trust
Norway Arvid Raknerud, Diana-Cristina Iancu Statistics Norway and Ministry of Trade and Industry
Portugal Jorge Portugal, Silvia Santos, Ana Gouveia, Luís Guia, Guida Nogueira, Presidencia da Republica, Min. Finanças, Min. Economia
Ricardo Alves
Spain Valentin Llorente Garcia Spanish Statistical Office
Sweden Eva Hagsten, Fredrik Andersson Statistics Sweden
Turkey Faik Yücel Günaydın Ministry of Science, Industry and Technology
United Kingdom Michael Anyadike-Danes, Richard Prothero, Giovanni Mangiarotti Aston Business School, ONS
United States Lucia Foster, Kristin McCue, Javier Miranda, Shawn Klimek Center for Economic Studies, US Census Bureau
OECD Giuseppe Berlingieri, Patrick Blanchenay, Sara Calligaris, Flavio Calvino,
Alessandra Colecchia, Chiara Criscuolo, Isabelle Desnoyers-James,
Peter Gal, Nicholas Johnstone, Carlo Menon, Dirk Pilat, Mariagrazia
Squicciarini, Andrew Wyckoff
BUSINESS DYNAMICS AND PRODUCTIVITY © OECD 2017 7

TABLE OF CONTENTS
Table of contents
Executive summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
List of acronyms and abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Chapter 1. Assessing the links between business dynamics and policy settings . . . . 21
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Going beyond the average firm paradigm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Organic versus non-organic growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
The impact of the crisis on employment stocks, flows and business dynamics . . 28
The role of sectors, ownership and trade status for job creation and destruction
and business dynamics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Business dynamics, reallocation and productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Chapter 2. Employment growth of establishments in the Brazilian economy:
Results by age and size groups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The plant employment dynamics over their life cycle . . . . . . . . . . . . . . . . . . . . . . . . 39
The “missing middle” and establishment size distribution in Brazil . . . . . . . . . . . . 46
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Annex 2.A1. Complementary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Annex 2.A2. Methodological details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Chapter 3. The role of mergers and acquisitions in employment dynamics in Belgium . 59
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Data section. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Organic growth versus growth through acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Employment effects of M&As. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
The probability of acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Chapter 4. Firm and job dynamics in the United Kingdom before, during and after
the global financial crisis: Getting in under the hood . . . . . . . . . . . . . . . . . . . . . . . 87
Context, motivation and approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Data sources and construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
BUSINESS DYNAMICS AND PRODUCTIVITY © OECD 2017 9