Competition and Firm Productivity: Evidence from Firm-Level Data

March 1, 2010

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper presents empirical evidence on the impact of competition on firm productivity. Using firm-level observations from the World Bank Enterprise Survey database, we find a positive and robust causal relationship between our proxies for competition and our measures of productivity. We also find that countries that implemented product-market reforms had a more pronounced increase in competition, and correspondingly, in productivity: the contribution to productivity growth due to competition spurred by product-market reforms is around 12-15 percent.

Subject: Commodity markets, Competition, Labor productivity, Productivity, Total factor productivity

Keywords: factor share, firm level, productivity growth, WP

Pages:
34
Volume:
2010
DOI:
https://doi.org/10.5089/9781451982114.001
Issue:
067
Series:
Working Paper No. 2010/067
Stock No:
WPIEA2010067
ISBN:
9781451982114
ISSN:
1018-5941

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