Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia

Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and...

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Main Authors:	Hallward-Driemeier, Mary, Rijkers, Bob
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY AGGREGATE PRODUCTIVITY GROWTH ALLOCATIVE EFFICIENCY AVERAGE PRODUCTIVITY AVERAGE PRODUCTIVITY GROWTH BANKING CRISES BANKS BUSINESS CYCLE BUSINESS CYCLES CAPITAL MARKET COMPARATIVE ANALYSIS COMPARATIVE ECONOMICS COMPETITIVE PRESSURE COMPETITIVENESS CONGLOMERATE CONGLOMERATES CREATIVE DESTRUCTION CRISES DEFLATORS DEMOCRACY DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRICS ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC RESEARCH EMPLOYEE EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT TURNOVER ENTREPRENEURS ENTRY RATE EQUILIBRIUM UNEMPLOYMENT EXPANSION EXPORTS FINANCIAL CRISES FINANCIAL CRISIS FIRM DYNAMICS FIRM ENTRY FIRM EXIT FIRM GROWTH FIRM PRODUCTIVITY FIRM SIZE FIRM SURVIVAL FIRM TURNOVER FIRM-LEVEL ANALYSIS GDP GROWTH MODELS INDUSTRIALIZATION INFLATION INFLATION RATES INTEREST RATES INVENTORIES JOB CREATION JOB DESTRUCTION JOB FLOWS JOB LOSSES JOBS LABOR DEMAND LABOR MARKET LABOR MARKET OUTCOMES LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR MARKETS LABOR REGULATION LABOR REGULATIONS LIQUIDITY LOAN MACROECONOMIC MODELS MACROECONOMICS MANUFACTURERS MANUFACTURING ESTABLISHMENTS MARKET FAILURES MINIMUM WAGE MINIMUM WAGES NET EMPLOYMENT OUTPUTS PREVIOUS SECTION PREVIOUS WORK PRIVATE SECTOR PRIVILEGED STATUS PRODUCTION FUNCTIONS PRODUCTIVE FIRMS PRODUCTIVITY PRODUCTIVITY DECOMPOSITIONS PRODUCTIVITY DIFFERENTIAL PRODUCTIVITY GAP PRODUCTIVITY GROWTH PROFITABILITY RESOURCE ALLOCATION SHAREHOLDERS SMALL FIRMS SOCIAL COSTS TOTAL OUTPUT UNSKILLED WORKERS USE VALUE VALUE ADDED WAGE LEVELS WORKER
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111102102529 http://hdl.handle.net/10986/3635

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recordtype	oai_dc
spelling	okr-10986-36352021-04-23T14:02:11Z Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia Hallward-Driemeier, Mary Rijkers, Bob ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY AGGREGATE PRODUCTIVITY GROWTH ALLOCATIVE EFFICIENCY AVERAGE PRODUCTIVITY AVERAGE PRODUCTIVITY GROWTH BANKING CRISES BANKS BUSINESS CYCLE BUSINESS CYCLES CAPITAL MARKET COMPARATIVE ANALYSIS COMPARATIVE ECONOMICS COMPETITIVE PRESSURE COMPETITIVENESS CONGLOMERATE CONGLOMERATES CREATIVE DESTRUCTION CRISES DEFLATORS DEMOCRACY DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRICS ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC RESEARCH EMPLOYEE EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT TURNOVER ENTREPRENEURS ENTRY RATE EQUILIBRIUM UNEMPLOYMENT EXPANSION EXPORTS FINANCIAL CRISES FINANCIAL CRISIS FIRM DYNAMICS FIRM ENTRY FIRM EXIT FIRM GROWTH FIRM PRODUCTIVITY FIRM SIZE FIRM SURVIVAL FIRM TURNOVER FIRM-LEVEL ANALYSIS GDP GROWTH MODELS INDUSTRIALIZATION INFLATION INFLATION RATES INTEREST RATES INVENTORIES JOB CREATION JOB DESTRUCTION JOB FLOWS JOB LOSSES JOBS LABOR DEMAND LABOR MARKET LABOR MARKET OUTCOMES LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR MARKETS LABOR REGULATION LABOR REGULATIONS LIQUIDITY LOAN MACROECONOMIC MODELS MACROECONOMICS MANUFACTURERS MANUFACTURING ESTABLISHMENTS MARKET FAILURES MINIMUM WAGE MINIMUM WAGES NET EMPLOYMENT OUTPUTS PREVIOUS SECTION PREVIOUS WORK PRIVATE SECTOR PRIVILEGED STATUS PRODUCTION FUNCTIONS PRODUCTIVE FIRMS PRODUCTIVITY PRODUCTIVITY DECOMPOSITIONS PRODUCTIVITY DIFFERENTIAL PRODUCTIVITY GAP PRODUCTIVITY GROWTH PROFITABILITY RESOURCE ALLOCATION SHAREHOLDERS SMALL FIRMS SOCIAL COSTS TOTAL OUTPUT UNSKILLED WORKERS USE VALUE VALUE ADDED WAGE LEVELS WORKER Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and the crisis induced the exit of relatively productive firms. The attenuation of the relationship between productivity and survival was stronger in provinces with comparatively lower reductions in minimum wages, but not due to reduced entry, changing loan conditions, or firms connected to the Suharto regime suffering disproportionately. On the bright side, firms that entered during the crisis were relatively more productive, which helped mitigate the reduction in aggregate productivity. 2012-03-19T18:05:57Z 2012-03-19T18:05:57Z 2011-11-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111102102529 http://hdl.handle.net/10986/3635 English Policy Research working paper ; no. WPS 5869 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper East Asia and Pacific East Asia and Pacific Southeast Asia Asia Indonesia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY AGGREGATE PRODUCTIVITY GROWTH ALLOCATIVE EFFICIENCY AVERAGE PRODUCTIVITY AVERAGE PRODUCTIVITY GROWTH BANKING CRISES BANKS BUSINESS CYCLE BUSINESS CYCLES CAPITAL MARKET COMPARATIVE ANALYSIS COMPARATIVE ECONOMICS COMPETITIVE PRESSURE COMPETITIVENESS CONGLOMERATE CONGLOMERATES CREATIVE DESTRUCTION CRISES DEFLATORS DEMOCRACY DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRICS ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC RESEARCH EMPLOYEE EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT TURNOVER ENTREPRENEURS ENTRY RATE EQUILIBRIUM UNEMPLOYMENT EXPANSION EXPORTS FINANCIAL CRISES FINANCIAL CRISIS FIRM DYNAMICS FIRM ENTRY FIRM EXIT FIRM GROWTH FIRM PRODUCTIVITY FIRM SIZE FIRM SURVIVAL FIRM TURNOVER FIRM-LEVEL ANALYSIS GDP GROWTH MODELS INDUSTRIALIZATION INFLATION INFLATION RATES INTEREST RATES INVENTORIES JOB CREATION JOB DESTRUCTION JOB FLOWS JOB LOSSES JOBS LABOR DEMAND LABOR MARKET LABOR MARKET OUTCOMES LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR MARKETS LABOR REGULATION LABOR REGULATIONS LIQUIDITY LOAN MACROECONOMIC MODELS MACROECONOMICS MANUFACTURERS MANUFACTURING ESTABLISHMENTS MARKET FAILURES MINIMUM WAGE MINIMUM WAGES NET EMPLOYMENT OUTPUTS PREVIOUS SECTION PREVIOUS WORK PRIVATE SECTOR PRIVILEGED STATUS PRODUCTION FUNCTIONS PRODUCTIVE FIRMS PRODUCTIVITY PRODUCTIVITY DECOMPOSITIONS PRODUCTIVITY DIFFERENTIAL PRODUCTIVITY GAP PRODUCTIVITY GROWTH PROFITABILITY RESOURCE ALLOCATION SHAREHOLDERS SMALL FIRMS SOCIAL COSTS TOTAL OUTPUT UNSKILLED WORKERS USE VALUE VALUE ADDED WAGE LEVELS WORKER
spellingShingle	ACCOUNTING ADJUSTMENT PROCESS AGGREGATE PRODUCTIVITY AGGREGATE PRODUCTIVITY GROWTH ALLOCATIVE EFFICIENCY AVERAGE PRODUCTIVITY AVERAGE PRODUCTIVITY GROWTH BANKING CRISES BANKS BUSINESS CYCLE BUSINESS CYCLES CAPITAL MARKET COMPARATIVE ANALYSIS COMPARATIVE ECONOMICS COMPETITIVE PRESSURE COMPETITIVENESS CONGLOMERATE CONGLOMERATES CREATIVE DESTRUCTION CRISES DEFLATORS DEMOCRACY DEVALUATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMETRICS ECONOMIC GROWTH ECONOMIC INTEGRATION ECONOMIC RESEARCH EMPLOYEE EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT TURNOVER ENTREPRENEURS ENTRY RATE EQUILIBRIUM UNEMPLOYMENT EXPANSION EXPORTS FINANCIAL CRISES FINANCIAL CRISIS FIRM DYNAMICS FIRM ENTRY FIRM EXIT FIRM GROWTH FIRM PRODUCTIVITY FIRM SIZE FIRM SURVIVAL FIRM TURNOVER FIRM-LEVEL ANALYSIS GDP GROWTH MODELS INDUSTRIALIZATION INFLATION INFLATION RATES INTEREST RATES INVENTORIES JOB CREATION JOB DESTRUCTION JOB FLOWS JOB LOSSES JOBS LABOR DEMAND LABOR MARKET LABOR MARKET OUTCOMES LABOR MARKET REGULATION LABOR MARKET REGULATIONS LABOR MARKETS LABOR REGULATION LABOR REGULATIONS LIQUIDITY LOAN MACROECONOMIC MODELS MACROECONOMICS MANUFACTURERS MANUFACTURING ESTABLISHMENTS MARKET FAILURES MINIMUM WAGE MINIMUM WAGES NET EMPLOYMENT OUTPUTS PREVIOUS SECTION PREVIOUS WORK PRIVATE SECTOR PRIVILEGED STATUS PRODUCTION FUNCTIONS PRODUCTIVE FIRMS PRODUCTIVITY PRODUCTIVITY DECOMPOSITIONS PRODUCTIVITY DIFFERENTIAL PRODUCTIVITY GAP PRODUCTIVITY GROWTH PROFITABILITY RESOURCE ALLOCATION SHAREHOLDERS SMALL FIRMS SOCIAL COSTS TOTAL OUTPUT UNSKILLED WORKERS USE VALUE VALUE ADDED WAGE LEVELS WORKER Hallward-Driemeier, Mary Rijkers, Bob Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia
geographic_facet	East Asia and Pacific East Asia and Pacific Southeast Asia Asia Indonesia
relation	Policy Research working paper ; no. WPS 5869
description	Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and the crisis induced the exit of relatively productive firms. The attenuation of the relationship between productivity and survival was stronger in provinces with comparatively lower reductions in minimum wages, but not due to reduced entry, changing loan conditions, or firms connected to the Suharto regime suffering disproportionately. On the bright side, firms that entered during the crisis were relatively more productive, which helped mitigate the reduction in aggregate productivity.
format	Publications & Research :: Policy Research Working Paper
author	Hallward-Driemeier, Mary Rijkers, Bob
author_facet	Hallward-Driemeier, Mary Rijkers, Bob
author_sort	Hallward-Driemeier, Mary
title	Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia
title_short	Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia
title_full	Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia
title_fullStr	Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia
title_full_unstemmed	Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia
title_sort	do crises catalyze creative destruction? firm-level evidence from indonesia
publishDate	2012
url	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111102102529 http://hdl.handle.net/10986/3635
_version_	1764387540866957312

Do Crises Catalyze Creative Destruction? Firm-level Evidence from Indonesia

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