Business Dynamics and Productivity
A dynamic business environment plays an important role not only as a key driver of job creation but also as an engine of productivity growth. A growing body of research highlights significant differences in business dynamics across countries and over time, in particular over the different phases of the business cycle. However, our understanding of these differences remains patchy, and this makes it more difficult for policy makers to implement economically efficient policies.
This collection of studies aims to fill this gap by providing new evidence on business dynamics from a cross-section of countries of different sizes, with different market and structural characteristics, and which are at different stages in their development process. The studies focus in particular on Belgium, Brazil, Canada, Costa Rica, Japan, New Zealand, Norway and the United Kingdom, shedding new light on how firms which differ in terms of their size, age, sector and other characteristics, respond to economic shocks, with a particular focus on differences in their responses to the last decade’s global financial crisis. Evidence collected in this volume also aims to provide a better understanding of the contribution of business dynamics to aggregate productivity and of the effects of economic policies across different firms and countries. Thus, it will help policy makers design better policies, harnessing productivity and employment growth in support of more inclusive and sustainable societies.
In a period of sluggish employment growth and disappointing productivity trends in most OECD countries, the central role played by start-ups and young firms in creating jobs and bringing innovations to market acquires renewed importance in the policy debate.
The OECD DynEmp project presents new evidence on the employment dynamics of start-ups and incumbents across more than 20 OECD and non-OECD economies. While entrants disproportionally contribute to job creation in all countries, significant differences exist in the extent to which they manage to do so. As shown in a recent report, "Cross-country Evidence on Start-up Dynamics", these cross-country differences can be analysed looking at differences in the job contribution of start-ups at the time of entry, determined by the combination of entry rates and average size at entry; and at differences in the post-entry job creation by start-ups, which in turn depends on the post-entry growth and survival rate.
The DynEmp report "No Country for Young Firms? Start-up Dynamics and National Policies" also suggests that national policies and framework conditions are likely to explain some of these differences. Policy failures appear to hamper significantly more start-ups than incumbents, especially in the most risky and volatile sectors, as well as in sectors that are more financially dependent.
The first phase of the project (DynEmp Express) led to the collection of a new database based on firm-level sources which presents a detailed portrait of the business structure and dynamics of 17 OECD countries plus Brazil over the period 2001-2011.
A number of significant extensions are being implemented in the second phase of the project entitled DynEmp v.2. First, the DynEmp network has been expanded to include several additional economies. Second, DynEmp v.2 now includes a more disaggregated analysis of transition dynamics allowing for the investigation of start-up dynamics in greater depth. Third, the dataset allows for a more granular analysis at the 2-digit sectoral level.
A new version of the DynEmp routine (DynEmp v.3) is currently in development and will include, among new features, the possibility to specify information on ownership, trade status, an optional distinction of de novo vs. de alio entry and a focus on ICT sectors. An extension of the DynEmp methodology to study employment dynamics at regional and local level is also ongoing.
The main findings of the project are:
|No Country for Young Firms? ¦ Policy note||xls|
|Cross-country evidence on start-up dynamics||xls|
|The Dynamics of Employment Growth: New Evidence from 18 Countries||xls|
|DynEmp: A Stata® Routine for Distributed Micro-data Analysis of Business Dynamics||xls|
|What Drives the Dynamics of Business Growth?|
|The OECD MultiProd project: Micro drivers of aggregate productivity|