| By: |
Saso Polanec |
| Abstract: |
This paper compiles a set of stylized facts on the evolution of Firm size and
labor and total factor productivity distributions during the process of
transition. These facts are based on the data for all Slovenian manufacturing
firms active between 1994 and 2003. Stylized picture of transition can be
summarized as follows. Initially, we can distinguish between two types of
firms: small and on average more productive and large and on average less
productive firms. Removal of institutional restrictions has spurred growth of
small firms and entry of new firms on one hand and decline and exit of large
firms on the other. These simultaneous shifts have transformed the shape of
firm size distribution from bimodal into unimodal. While labor and total
factor productivity distributions exhibit large right-hand shifts and lower
heterogeneity over time, firm productivity rankings changed substantially.
Smaller firms, which were initially more productive, exhibited lower
productivity growth rates and thus gradually lost their advantage. Commonly
held view of transition as a process of reallocation of resources from
inefficient state to efficient private firms is at odds with our results of
aggregate labor and total factor productivity decompositions. Almost half of
aggregate labor productivity growth can be explained by within firm growth and
the rest by reallocation. Our evidence suggests that within firm growth seems
to be related to the process of technological catching up of less
productivelarge firms. These stylized facts may give a wrong impression of
transition being a deterministic process, while it is not. The process is
stochastic and thus similar to those found for established market economies.
Hence theoretical models of transition should reflect deterministic features
that we outlined and preserve stochastic elements introduced in now standard
models of industrial dynamics. |
| Keywords: |
manufacturing, size, labor productivity, total factor productivity, catching up, distributions, transition |
| JEL: |
L11 L16 L60 |
| URL: |
http://d.repec.org/n?u=RePEc:lic:licosd:15404&r=eff |