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Iacovone, Leonardo

Global Practice on Trade and Competitiveness, The World Bank
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Global Practice on Trade and Competitiveness, The World Bank
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Last updated: December 7, 2023
Citations 166 Scopus

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Now showing 1 - 10 of 41
  • Publication
    The Future of Work: Implications for Equity and Growth in Europe
    (Washington, DC: World Bank, 2023-12-07) Dalvit, Nicolò; De Hoyos, Rafael; Iacovone, Leonardo; Pantelaiou, Ioanna; Torre, Iván
    This report aims to contribute to our understanding of the relationship between technology, economic growth, and equity by analyzing the impact of technological progress on firm-level productivity, market concentration, and labor market outcomes of workers with different education levels. The analysis focuses on the effects that technology can have in European Union (EU) member states, addressing two main distributional challenges: (i) an increase in market concentration, with a few large and innovative firms hoarding the benefits of technological progress, and (ii) technological progress exacerbating income differences between highly educated and other workers. These two challenges, and the public policies aiming to address them, will shape the future relationship between technological progress, economic growth, and income distribution in Europe.
  • Publication
    Bayesian Impact Evaluation with Informative Priors: An Application to a Colombian Management and Export Improvement Program
    (World Bank, Washington, DC, 2023-01) Iacovone, Leonardo; McKenzie, David
    Policymakers often test expensive new programs on relatively small samples. Formally incorporating informative Bayesian priors into impact evaluation offers the promise to learn more from these experiments. A Colombian government program which aimed to increase exporting was trialed experimentally on 200 firms with this goal in mind. Priors were elicited from academics, policymakers, and firms. Contrary to these priors, frequentist estimation can not reject 0 effects in 2019, and finds some negative impacts in 2020. For binary outcomes like whether firms export, frequentist estimates are relatively precise, and Bayesian credible posterior intervals update to overlap almost completely with standard confidence intervals. For outcomes like increasing export variety, where the priors align with the data, the value of these priors is seen in posterior intervals that are considerably narrower than frequentist confidence intervals. Finally, for noisy outcomes like export value, posterior intervals show almost no updating from the priors, highlighting how uninformative the data are about such outcomes.
  • Publication
    Cartels, Antitrust Enforcement, and Industry Performance: Evidence from Mexico
    (World Bank, Washington, DC, 2022-12) Reed, Tristan; Pereira López, Mariana; Urrutia Arrieta, Ana; Iacovone, Leonardo
    Forty percent of economic activities in Mexico weighed by sales have been investigated for illegal monopolistic practices since the Federal Competition Commission was established in 1993. By exploiting some unique features of the Mexican investigative system, and using a synthetic control approach, this paper examines the causal impact of antitrust sanctions on industry performance and aggregate outcomes. Sanctions cause sales and wages to increase and profit margins to fall in the sanctioned sectors, thus benefiting consumers and workers. Overall, antitrust enforcement contributes roughly half a percent of per capita gross domestic product growth. Outcomes of investigations that are closed without sanction fail to reject the hypothesis that some harmful conduct is not sanctioned because investigators lack resources to prove it conclusively. An implication is that the Commission could generate greater benefits with additional investigative resources.
  • Publication
    Productivity Growth in Mexico: Understanding Main Dynamics and Key Drivers
    (World Bank, Washington, DC, 2022) Iacovone, Leonardo; Olaberria, Eduardo; Pereira Lopez, Mariana De La Paz
    The report undertakes, for the first time, a comprehensive firm-level analysis of the entire Mexican economy over 25 years, relying on the last six rounds of the Economic Census, which were conducted between 1994 and 2019 and surveyed more than 20 million businesses. It finds that Mexico’s disappointing aggregate productivity masks large differences in productivity levels and growth across locations, sectors, and firms. A geographic productivity divide runs between the North-Center and South of Mexico, but large differences also persist between municipalities within regions. Fast-growing municipalities that have caught up to the Mexican productivity frontier, including in the South, while others have failed to grow at all. There is also a divide between modern firms, with access to finance and strong management, integrated into global value chains (GVCs), and more traditional firms characterized by limited access to finance and weak capabilities, unable to benefit from Mexico’s regional and global integration. The report shows that Mexico’s aggregate productivity is weakened by structural factors at industry and firm level — access to finance, lack of incentives to invest in technology, managerial capacities, and the business environment — that impede productive firms’ access to resources. The rest of this summary gives a synopsis of the report’s main findings and recommendations.
  • Publication
    Firm Recovery during COVID-19: Six Stylized Facts
    (World Bank, Washington, DC, 2021-10) Cirera, Xavier; Cruz, Marcio; Grover, Arti; Iacovone, Leonardo; Medvedev, Denis
    Building on prior work that documented the impact of COVID-19 on firms in developing countries using the first wave of Business Pulse Surveys, this paper presents a new set of stylized facts on firm recovery, covering 65,000 observations in 38 countries. This paper suggests that: One, since the outset of the pandemic, some aspects of business performance such as sales show signs of partial recovery. Two, other aspects remain challenging, including persistently high uncertainty and financial fragility. Three, recovery is heterogeneous across firms and more sensitive to firm-level attributes such as size, sector, and initial productivity than to country-level differences in the severity of the initial shock. In particular, larger and more productive firms are recovering faster, with implications for competition policy and allocative efficiency. Four, the decline in jobs has been steeper during the initial shock than the expansion in employment during recovery, raising the risk of a "jobless" recovery pattern. Five, the diffusion of digital technology and product innovation accelerated during the pandemic but did so unevenly, further widening gaps between small and large firms. Six, businesses now have more access to policy support, but poorer countries continue to lag behind and appropriate targeting of firms remains a challenge.
  • Publication
    The Impact of the COVID-19 Pandemic on Women-Led Businesses
    (World Bank, Washington, DC, 2021-10) Torres, Jesica; Maduko, Franklin; Gaddis, Isis; Iacovone, Leonardo; Beegle, Kathleen
    The COVID-19 pandemic has struck businesses across the globe with unprecedented impacts. The world economy has been hit hard and firms have experienced a myriad of challenges, but these challenges have been heterogeneous across firms. This paper examines one important dimension of this heterogeneity: the differential effect of the pandemic on women-led and men-led businesses. The paper exploits a unique sample of close to 40,000 mainly formal businesses from 49 countries covering the months between April and September 2020. The findings show that women-led micro-businesses, women-led businesses in the hospitality industry, and women-led businesses in countries more severely affected by the COVID-19 shock were disproportionately hit compared with businesses led by men. At the same time, women-led micro-firms were markedly more likely to report increasing the use of digital platforms, but less likely to invest in software, equipment, or digital solutions. Finally, the findings also show that women-led businesses were less likely to have received some form of public support although they have been hit harder in some domains. In a crisis of the magnitude of the COVID-19 pandemic, evidence tracing the impact of the shock in a timely fashion is desperately needed to help inform the design of policy interventions. This real-time glimpse into women-led businesses fills this need for robust and policy-relevant evidence, and due to the large country coverage of the data, it is possible to identify patterns that extend beyond any one country, region, or sector, but at the cost of some granularity for testing more complex economic theories.
  • Publication
    Policies to Support Businesses through the COVID-19 Shock: A Firm-Level Perspective
    (World Bank, Washington, DC, 2021-01) Lopez Cordova, Jose Ernesto; Cirera, Xavier; Cruz, Marcio; Okechukwu Maduko, Franklin; Davies, Elwyn; Grover, Arti; Reyes Ortega, Santiago; Iacovone, Leonardo; Torres, Jesica; Medvedev, Denis; Nayyar, Gaurav
    Relying on a novel dataset covering more than 120,000 firms in 60 countries, this paper con-tributes to the debate about D policies to support businesses through the COVID-19 pandemic. While governments around the world have implemented a wide range of policy support measures, evidence on the reach of these policies, the alignment of measures with firm needs, and their targeting and effectiveness remains scarce. This paper provides the most comprehensive assessment to date of these issues, focusing primarily on the developing economies. It shows that policy reach has been limited, especially for the more vulnerable firms and countries, and identifies mismatches between policies provided and policies most sought. It also provides some indicative evidence regarding mistargeting of policies and their effectiveness in addressing liquidity constraints and preventing layoffs. This assessment provides some early guidance to policymakers on tailoring their COVID-19 business support packages and points to new directions in data and research efforts needed to guide policy responses to the current pandemic and future crises.
  • Publication
    Unmasking the Impact of COVID-19 on Businesses: Firm Level Evidence from Across the World
    (World Bank, Washington, DC, 2020-10) Apedo-Amah, Marie Christine; Avdiu, Besart; Cirera, Xavier; Cruz, Marcio; Davies, Elwyn; Grover, Arti; Iacovone, Leonardo; Kilinc, Umut; Medvedev, Denis; Maduko, Franklin Okechukwu; Poupakis, Stavros; Torres, Jesica; Tran, Trang Thu
    This paper provides a comprehensive assessment of the short-term impact of the COVID-19 pandemic on businesses worldwide with a focus on developing countries. The results are based on a novel data set collected by the World Bank Group and several partner institutions in 51 countries covering more than 100,000 businesses. The paper provides several stylized facts. First, the COVID-19 shock has been severe and widespread across firms, with persistent negative impact on sales. Second, the employment adjustment has operated mostly along the intensive margin (that is leave of absence and reduction in hours), with a small share of firms laying off workers. Third, smaller firms are disproportionately facing greater financial constraints. Fourth, firms are increasingly relying on digital solutions as a response to the shock. Fifth, there is great uncertainty about the future, especially among firms that have experienced a larger drop in sales, which is associated with job losses. These findings provide a better understanding of the magnitude and distribution of the shock, the main channels affecting businesses, and how firms are adjusting. The paper concludes by discussing some avenues for future research.
  • Publication
    Women Entrepreneurs in Mexico: Breaking Sectoral Segmentation and Increasing Profits
    (World Bank, Washington, DC, 2020-10) Cucagna, Emilia; Iacovone, Leonardo; Rubiano-Matulevich, Eliana
    Across the globe, women often face lower income opportunities relative to men. Many of the dierences in economic outcomes can be explained by the sectors in which women tend to operate. Structural factors also contribute to the gender gap in economic opportunities. Mexican women who cross over to operate businesses in male-dominated sectors perform better than noncrossovers in a range of indicators, including sales and profits. This brief focuses on the women entrepreneurs in Mexico as of October 2020.
  • Publication
    Spatial Gaps in Management Quality: Evidence from a Lagging Region in Croatia
    (World Bank, Washington, DC, 2020-04) Chakraborty, Pavel; Grover, Arti; Iacovone, Leonardo
    Embedding management and operational practices survey in a broader firm capabilities survey, this report finds that: (i) relative to the rest of Croatia, an average firm in the lagging region of the country (Eastern Croatia) is only slightly behind in the adoption of structured management practices. Nevertheless, overall, Croatia is farther from a frontier economy such as the United States. (ii) There is wide heterogeneity in adoption of management practices in the country, such that a large share of firms in the lagging region are badly managed relative to those in the rest of the country. (iii) Better managed firms in all regions, including Eastern Croatia, show superior firm performance. What drives better management? Global linkages matter for firms in other countries and in all regions of Croatia except the lagging region. Unlike other countries, firms in Croatia do not upgrade management quality as they age, perhaps due to lack of pro-competitive forces. This report recommends focusing on policies that improve allocative efficiency in the region and help firms establish global linkages, and more direct intervention for improving the management quality of firms.