Firm Dynamics and Firm-Level Total Factor Productivity in Belgium: Belgium
Selected Issues Papers, March 26, 2025
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- Firm Dynamics and Firm-Level Total Factor Productivity in Belgium: Belgium
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Bibliographic details
- Authors: Karen Coulibaly
- Published: March 26, 2025
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798229005364.018
Summary
- Belgium’s total factor productivity (TFP) growth slowdown since the late 1990s has been worse than peers’ despite significant spending on innovation.
- This is largely explained by subdued business dynamics, insufficient firm access to financing, labor and capital misallocation, and the predominance of small firms.
Major findings
- Subdued business dynamics are a key driver of weak firm-level productivity.
- Insufficient firm access to financing constrains firm growth and scaling.
- Labor and capital misallocation reduce aggregate productivity gains.
- The predominance of small firms limits productivity improvements despite innovation spending.
Policy recommendations
- Further product-market reforms to reduce barriers to entry and lower exit costs are needed to raise TFP.
- Reform the wage-setting mechanism to better align wage and productivity developments to improve labor allocation.
- Deepen the European single market and advance the capital market union to contribute to higher Belgian firm productivity and facilitate firm scale up.
Subjects and keywords
- Subject: Capital markets, Financial markets, International trade, Production, Productivity, Total factor productivity, Trade barriers
- Keywords: access to finance, Capital markets, Europe, firm dynamics, Firm entry/exit barriers, firm productivity, FIRM-LEVEL total factor productivity, misallocation, product market regulation, Productivity, productivity development, Total factor productivity, Trade barriers, wage formation
Content in this bundle
- Firm Dynamics and Firm-Level Total Factor Productivity in Belgium