Stylized Facts on Productivity Growth : Evidence from Firm-level Data in Croatia
Drawing on a representative sample of firms, this paper presents some microeconomic evidence on the productivity growth process in Croatia since the onset of recession (2008-12). Four types of results are highlighted. First, there is a persistent (...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/07/19898911/stylized-facts-productivity-growth-evidence-firm-level-data-croatia http://hdl.handle.net/10986/19387 |
| Summary: | Drawing on a representative sample of
firms, this paper presents some microeconomic evidence on
the productivity growth process in Croatia since the onset
of recession (2008-12). Four types of results are
highlighted. First, there is a persistent (and increasing)
heterogeneity in the performance of Croatian firms along
outcome measures. Second, Croatia lags behind regional peers
in entrepreneurship measures, which suggests a comparatively
lower economic dynamism. Third, the lack of dynamism
displayed by the Croatian economy is confirmed when looking
at the firm entry and exit process: the analytical results
point to reduced firm dynamism compared with Croatia's
peers in Europe and Central Asia. Fourth, the contribution
of net entry to overall productivity growth in Croatia is
surprisingly negative. This is contrary to what would be
expected based on the literature and suggests that the
process of "destructive creation" in Croatia has
not been efficient, as the market might be eliminating firms
that are potentially productive. Policies that foster market
contestability should be pursued, especially policies aiming
at better product market regulation (such as liberalization
of entry into the service sector, particularly retail and
infrastructure). Measures to help finance entrepreneurship
(in promising sectors) should be used to support
enhancements in firm productivity. In addition, appropriate
bankruptcy rules play a key role by easing the exit process
and allowing low-productive units to leave the market and
free resources that can be better used by other, more
efficient, firms. |
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