Publication: Do Market Pressures Induce Economic Efficiency? The Case of Slovenian Manufacturing, 1994-2001
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Date
2009
ISSN
00384038
Published
2009
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Using a unique longitudinal data set on all manufacturing firms in Slovenia from 1994 to 2001, this article analyzes how firm efficiency changed in response to changing competitive pressures associated with the transition to market. Results show that the period was one of atypically rapid growth of total factor productivity (TFP). The rise in firm efficiency occurs across almost all industries and firm types: large or small, state or private, domestic or foreign owned. Changes in firm ownership type have no direct impact on firm efficiency. However, increased market competition related to rising market share of private firms, new market entrants, foreign-owned firms, and international trade raises TFP across all firms in an industry, whether private or state owned. In addition, competitive pressures that sort out inefficient firms of all types and retain the most efficient, coupled with the entry of new private firms that are at least as efficient as surviving firms, prove to be the major source of TFP gains. Results strongly confirm that market competition fosters efficiency.
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Publication Do Market Pressures Induce Economic Efficiency? The Case of Slovenian Manufacturing, 1994-2001(Washington, DC: World Bank, 2004-01)The Slovenian transition represents a slow, but steady liberalization of constraints on competition. Using a unique longitudinal data set on all manufacturing firms in Slovenia over the period 1994-2001, the authors analyze how firm efficiency changed, in response to changing competitive pressures, holding constant firm attributes. Results show that the period was one of atypically rapid growth of total factor productivity (TFP), relative to levels in OECD countries, and that the rise in firm efficiency occurs across almost all industries and firm types - large or small, state or private, and domestic or foreign-owned. Changes in firm ownership type, have no impact on firm efficiency. Rather, competitive pressures that sort out inefficient firms of all types, and retain the most efficient, coupled with the entry of new private firms that are at least as efficient as surviving firms, prove to be the major source of TFP gains. Market competition from new entrants, foreign-owned firms, and international trade, also raise firm efficiency in the industry. Results strongly confirm that market competition fosters efficiency.Publication Labor Market Regulations : What Do We Know about Their Impacts in Developing Countries?(World Bank, Washington, DC, 2014-03)Labor market regulation is a high-profile, and often contentious, area of public policy. Although these regulations have been studied most extensively in developed countries, there is a growing body of literature on their effects in developing countries. This paper reviews that literature and focuses on the impacts of two important types of labor market regulation, minimum wages and employment protection legislation (EPL), on employment, earnings, and productivity. Strong and opposing views exist regarding the costs and benefits of these regulations, but the results of this review suggest that their impacts are generally smaller than the heat of the debates would suggest. Efficiency effects are found sometimes, but not always, and the effects can be in either direction and are usually modest. The distributional impacts of both minimum wage and employment protection legislation are clearer, with two effects predominating: an equalizing effect among covered workers, but with groups such as youth, women, and the less skilled disproportionately outside the coverage and its benefits. Although the overall conclusion is one of modest effects in most cases, the policy implication is not that these regulations do not matter. On the one hand, both minimum wages and EPL can affect distributional objectives. On the other hand, these regulations can generate undesirable economic or social impacts if they are established or operate in ways that exacerbate the labor market imperfections that they were designed to address.Publication A Rural-Urban Comparison of Manufacturing Enterprise Performance in Ethiopia(2010)Manufacturing enterprises in rural and urban Ethiopia are compared to examine how location and investment climate characteristics affect performance. Urban firms are larger, more capital intensive and have higher labor productivity than rural firms, yet there is no strong evidence of increasing returns to scale. The hypothesis that firms in rural towns have the same average total factor productivity as urban firms is not rejected; however, firms in remote rural areas are less productive. Rural firms grow less quickly than urban firms. These results can partly be attributed to differences in the quality of infrastructure, access to credit and transportation costs across rural and urban areas. Since rural firms operate in a business environment that is very different from its urban counterpart, lessons derived from urban investment climate surveys cannot immediately be transferred to rural areas.Publication Services Inputs and Firm Productivity in Sub-Suharan Africa: Evidence from Firm-Level Data(2008)This paper investigates the relationship between the productivity of African manufacturing firms and their access to services inputs. We use data from the World Bank Enterprise Survey for over 1,000 firms in ten Sub-Saharan African countries to calculate the total factor productivity of firms. The Enterprise Surveys also contain unique measures of firms' access to communications, electricity and financial services. The availability of these measures at the firm level, both as subjective and objective indicators, allows us to exploit the variation in services performance at the sub-national regional level. Furthermore, by using the regional variation in services performance, we are also able to address concerns about the possible endogeneity of the services variables. Our results show a significant and positive relationship between firm productivity and service performance in all three services sectors analysed. The paper thus provides support for the argument that improvements in services industries contribute to enhancing the performance of downstream economic activities, and thus are an essential element of a strategy for promoting growth and reducing poverty.Publication Training Funds and the Incidence of Training : The Case of Mauritius(Taylor and Francis, 2015-02-24)Training funds are used to incentivize training in developing countries, but the funds are based on payroll taxes that lower the return to training. In the absence of training funds, larger, high-wage and more capital-intensive firms are the most likely to offer training unless they are liquidity constrained. If firms are not liquidity constrained, the fund could lower training investments. Using an administrative data set on the Mauritius training fund, we find that the firms most likely to train pay more in taxes than they gain in subsidies. The smallest firms receive more benefits than they pay in taxes.
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