Productivity Growth in Romania
This paper examines productivity growth in Romania using balance sheet data for a census of Romanian firms in 2011-17. Three measures of productivity are estimated: labor productivity, revenue total factor productivity, and revenue total factor productivity adjusted for markups. Drawing from these measures, the paper follows a two-step approach to answer two fundamental questions: (i) who are the firms -- and what are their key characteristics -- driving and dragging productivity growth in Romania? and (ii) what are the drivers behind productivity expansion? A first step of the analysis characterizes productivity leaders and laggards, finding that companies at the domestic productivity frontier are older and larger, have higher capital intensity, and pay higher wages. Domestic market leaders charge higher markups, especially in manufacturing, but are not becoming more efficient. A second step of the analysis decomposes aggregate productivity growth and finds that reallocation of market shares to more efficient players has been the main driver in manufacturing but not in services, which are typically more sheltered from competition. At the same time, individual firms are becoming less productive, suggesting that there is scope to improve firm capabilities, particularly in services. These findings suggest a policy agenda for Romania centered on removing distortions to competition and boosting human capital.
| Main Authors: | , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019-10
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| Subjects: | PRODUCTIVITY GROWTH, TOTAL FACTOR PRODUCTIVITY, FIRM PRODUCTIVITY, MARKET LEADER, COMPETITION, |
| Online Access: | http://documents.worldbank.org/curated/en/751111571151886548/Productivity-Growth-in-Romania-A-Firm-Level-Analysis https://hdl.handle.net/10986/32588 |
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| Summary: | This paper examines productivity growth
in Romania using balance sheet data for a census of Romanian
firms in 2011-17. Three measures of productivity are
estimated: labor productivity, revenue total factor
productivity, and revenue total factor productivity adjusted
for markups. Drawing from these measures, the paper follows
a two-step approach to answer two fundamental questions: (i)
who are the firms -- and what are their key characteristics
-- driving and dragging productivity growth in Romania? and
(ii) what are the drivers behind productivity expansion? A
first step of the analysis characterizes productivity
leaders and laggards, finding that companies at the domestic
productivity frontier are older and larger, have higher
capital intensity, and pay higher wages. Domestic market
leaders charge higher markups, especially in manufacturing,
but are not becoming more efficient. A second step of the
analysis decomposes aggregate productivity growth and finds
that reallocation of market shares to more efficient players
has been the main driver in manufacturing but not in
services, which are typically more sheltered from
competition. At the same time, individual firms are becoming
less productive, suggesting that there is scope to improve
firm capabilities, particularly in services. These findings
suggest a policy agenda for Romania centered on removing
distortions to competition and boosting human capital. |
|---|