Measuring and Analyzing Cross-Country Differences in Firm Dynamics

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Abstract
This chapter reports the results from a large research project bringing together researchers from twenty-four countries to standardize data definitions and construct comparable statistics on producer dynamics and productivity. It shows that within-firm changes in productivity and net entry are the major sources of labor productivity growth in most countries. The measurement errors affect aggregation indicators such as the mean or sum of firm-level data. Differences in average firm size appear to be largely driven by within-sector differences, although in some countries sectoral specialization also plays a significant role. Moreover, the entry of small firms is relatively easy while larger-scale entry is more difficult, but survival among small firms is also more difficult. Surviving firms are relatively larger and tend to grow rapidly. The data show that virtually all the countries exhibit positive allocative efficiency.

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