## You Are Suffocating Me! Firm-Level Evidence on Crowding Out

_IMF Working Papers, April 24, 2019_

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## Bibliographic details
- Authors: Serhan Cevik
- Published: April 24, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498311090.001

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### Summary
- Literature on whether government spending crowds out or crowds in the private sector is large, but still without an unambiguous conclusion.
- Using firm-level data from Ukraine, this paper provides a granular empirical investigation to disentangle the impact of state-owned enterprises (SOEs) on private firm investment in Ukraine—a large transition economy.
- Controlling for firm characteristics and systematic differences across sectors, the results indicate that the SOE concentration in a given sector has a statistically significant negative effect on private fixed capital formation.
- The impact of SOEs is stronger in those industries in which SOEs have a more dominant presence.
- These findings imply that private firms operating in sectors with a high level of SOE concentration invest systematically less than businesses that are not competing directly with SOEs.

### Key Findings and Statistics
- SOE concentration in a sector has a "statistically significant negative effect" on private fixed capital formation. 
- The negative impact of SOEs is larger in industries where SOEs have a more dominant presence.
- The paper is 15 pages in length.
- Publication date: April 24, 2019.
- Series and identifiers: Working Paper No. 2019/080; Issue: 080; Volume: 2019; DOI: https://doi.org/10.5089/9781498311090.001; ISBN: 9781498311090; ISSN: 1018-5941; Stock No: WPIEA2019080.

### Methodology and Data
- Firm-level empirical investigation using data from Ukraine.
- Controls include firm characteristics and systematic differences across sectors.
- Focus on private fixed capital formation as the investment outcome of interest.
- Analysis investigates variation in SOE concentration across sectors and differential impacts where SOEs are more dominant.

### Policy Implications and Interpretation
- High SOE concentration in a sector is associated with lower private sector investment in that sector, suggesting crowding out at the firm level.
- The sectoral dominance of SOEs matters: policy measures addressing private investment constraints may need to be tailored to sectors with high SOE presence.
- Findings inform debates on public enterprise roles and private investment dynamics in transition economies.

*IMF Working Paper — Serhan Cevik. "You Are Suffocating Me! Firm-Level Evidence on Crowding Out", April 24, 2019 (Working Paper No. 2019/080).*

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_Source: https://www.imf.org/en/publications/wp/issues/2019/04/24/you-are-suffocating-me-firm-level-evidence-on-crowding-out-46720_