Size and Age of Establishments : Evidence from Developing Countries

Survey data from 120 developing countries are used to examine the relation between establishment size and age in the formal sector. Existing research suggests that manufacturing establishments in developing countries do not grow over time, most likely because of market imperfections and regulations. To the contrary, this paper finds that the average plant in developing countries that is more than 40 years old employs almost five times as many workers as the average plant that is five years old or younger. The analysis finds consistent evidence when it looks within a large country, India, based on detailed manufacturing census data over 23 years. It also finds that differences in financial development across Indian states, while substantial, have a minor effect on firm growth, consistent with inefficiency of state-owned financial systems. These results hold controlling for differences in labor regulations across states, capital intensity, labor regulations, and firms born before and after the major reforms.

Bibliographic Details

Main Authors:	Ayyagari, Meghana, Demirguc-Kunt, Asli, Maksimovic, Vojislav
Language:	English en_US
Published:	World Bank, Washington, DC 2013-12
Subjects:	ACCOUNTING, AGE GROUP, AGE GROUPS, BANK BRANCHES, BANKING REFORM, BANKING REGULATION, BANKING SECTOR, BANKING SERVICES, BANKING SYSTEM, BANKING SYSTEMS, BANKS, BRANCH, BRANCHES, BUSINESS ENVIRONMENT, BUSINESS ENVIRONMENTS, CAPITAL EXPENDITURES, CAPITAL MARKET, COMMERCIAL BANKS, COMPANY, CONTRACT LABOR, CORPORATE FINANCE, CORPORATIONS, CORRELATIONS, COUNTRY COMPARISONS, CREDIT LINES, CROSS-SECTIONAL EVIDENCE, DEPOSIT INSURANCE, DEPOSITS, DEVELOPMENT RESEARCH, ECONOMETRICS, ECONOMICS, EMPLOYEE, EMPLOYMENT, EMPLOYMENT DYNAMICS, EMPLOYMENT LEVEL, EMPLOYMENT LEVELS, EMPLOYMENT PROTECTION LEGISLATION, ENTREPRENEURIAL ACTIVITY, ENTREPRENEURSHIP, EXPANSION, FINANCIAL INSTITUTIONS, FINANCIAL MARKETS, FINANCIAL STRUCTURE, FINANCIAL SYSTEMS, FIRM EXIT, FIRM GROWTH, FIRM LEVEL, FIRM PERFORMANCE, FIRM SIZE, FIRM SIZE DISTRIBUTION, FIRMS, FOREIGN BANKS, INDUSTRY CHARACTERISTICS, INFORMAL SECTOR, JOB CREATION, JOBS, LABOR FORCE, LABOR INTENSITY, LABOR LAWS, LABOR MARKET INSTITUTIONS, LABOR MARKET OUTCOMES, LABOR MARKET REGULATION, LABOR MARKET REGULATIONS, LABOR MARKETS, LABOR PRODUCTIVITY, LABOR REGULATION, LABOR REGULATIONS, LABOUR, LABOUR MARKET, LABOUR MARKET REGULATION, LAWS, LEGISLATION, LICENSING, MACHINERY, MACROECONOMICS, MANUFACTURING ESTABLISHMENT, MANUFACTURING ESTABLISHMENTS, MANUFACTURING INDUSTRIES, MERGERS, METHODOLOGY, MIGRATION, NATIONALIZED BANKS, PLANT SIZE, PRIVATE BANKS, PRIVATE SECTOR, PRIVATIZATION, PRODUCTION PROCESS, PRODUCTIVITY, PRODUCTIVITY IMPROVEMENTS, REGIONAL RURAL BANKS, RESEARCH WORKING PAPERS, RESEARCHERS, RESERVE BANK OF INDIA, RIGID LABOR MARKET, SIZE OF FIRMS, SMALL ENTERPRISES, SMALL FIRM, SMALL FIRMS, SURVEY DATA, SURVEY INSTRUMENTS, TOTAL EMPLOYMENT, TRANSPORT, UNEMPLOYMENT, UNPAID FAMILY WORKERS, WAGES, WATER SUPPLY, WORKER, WORKERS, firm life cycle,
Online Access:	http://documents.worldbank.org/curated/en/2013/12/18623482/size-age-establishments-evidence-developing-countries https://hdl.handle.net/10986/16934
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