Premium
The Role of Firm Dynamics in Australia's Productivity Growth
Author(s) -
Breunig Robert,
Wong MarnHeong
Publication year - 2007
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.2007.00444.x
Subject(s) - productivity , commission , citation , library science , citation impact , political science , economics , law , economic growth , computer science
One seldom-explored factor explaining industry productivity growth in Australia is the role of firm entry and exit. The importance of firm dynamics has been highlighted by a growing number of international studies on large-scale longitudinal micro datasets; however, only one such study has been undertaken on Australian firms (see Bland and Will 2001). Firm dynamics which result in a reallocation of output shares and resources from low to high productivity firms can substantially impact aggregate productivity growth. Accordingly, policies aimed at enhancing aggregate productivity and economic growth should take into account the costs of entry (such as excessive administrative regulations) and exit (such as insolvency regimes). 1 In this light, the role of firm dynamics in Australia’s productivity growth merits greater attention, and it is the aim of this article to document its importance. In this article we review patterns of firm movements and present estimates of the contribution of firm dynamics to the productivity growth of Australian industries. Our estimates are principally drawn from the Business Longitudinal Survey (BLS), which covered the period 1994–95 to 1997–98. 2 2. Explanations of Firm Dynamics