Size and Age of Establishments : Evidence from Developing Countries
Survey data from 120 developing countries are used to examine the relation between establishment size and age in the formal sector. Existing research suggests that manufacturing establishments in developing countries do not grow over time, most lik...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/12/18623482/size-age-establishments-evidence-developing-countries http://hdl.handle.net/10986/16934 |
| Summary: | Survey data from 120 developing
countries are used to examine the relation between
establishment size and age in the formal sector. Existing
research suggests that manufacturing establishments in
developing countries do not grow over time, most likely
because of market imperfections and regulations. To the
contrary, this paper finds that the average plant in
developing countries that is more than 40 years old employs
almost five times as many workers as the average plant that
is five years old or younger. The analysis finds consistent
evidence when it looks within a large country, India, based
on detailed manufacturing census data over 23 years. It also
finds that differences in financial development across
Indian states, while substantial, have a minor effect on
firm growth, consistent with inefficiency of state-owned
financial systems. These results hold controlling for
differences in labor regulations across states, capital
intensity, labor regulations, and firms born before and
after the major reforms. |
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