In this paper we provide an analysis of the process of creative destruction across 24
countries and 2-digit industries over the past decade. We rely on a newly assembled dataset
that draws from different micro data sources (business registers, census, or representative
enterprise surveys). The novelty of our approach is in the harmonisation of firm level data
across countries, which enables international comparisons and the identification of country
specific factors as opposed to sectoral and time effects. All countries display a massive
reallocation of resources, with the entry and exit of many firms in all markets, the failure of
many newcomers and the expansion of successful ones. This process of creative destruction
affects productivity directly, by reallocating resources towards more productive uses, but also
indirectly through the effects of increased market contestability. There are also large
differences across groups of countries. While entry and exit rates are fairly similar across
industrial countries, post entry performance differs markedly between Europe and the U.S., a
potential indication of the importance of barriers to firm growth as opposed to barriers to
entry. Transition economies show an even more impressive process of creative destruction
and, amongst them, those that have progressed the most towards a market economy show
better outcomes from this process. Finally, Mexico shows large firm dynamics with many new
firms entering the battle but also many failing rapidly, while Argentina resembles more of
Continental Europe with smaller flows and less impressive post-entry growth of successful
firms.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.