Evolution of the Firm Size Distribution in Turkey

Abstract

Evolution in economics has been treated mainly as a theoretical journey. The methodological difficulties reside in strict assumptions in order to maintain a tractable model for firm dynamics. Agent-Based Computational modeling could be an important breakthrough for evolutionary applications. However, these models rely on deep interpretations of the complete data. In this study, in depth analysis of Turkish firm level data has been presented with an evolutionary point of view using the method of density estimations. The comprehensiveness of the data is unique to the literature. For modeling purposes, Turkish firms could be seen as representing their birth era. The stagnant nature of firms could also be considered as linked to the lack of managerial delegation in underdeveloped economies.

The Dynamics of Firm Growth in Sub-Saharan Africa: Evidence from Ethiopian Manufacturing Sector 1996–2017

“…Interestingly it is in line with the arguments of Akcigit et al ( 2016 ) indicating firms established by subsistence-seeking entrepreneurs with little insignificant growth potential, in the long run, might survive, while this might be partly due to that Ethiopia is a low-income country with a low level of urbanization and the consumption behavior of the society is most likely goods and services produced by those predominantly small firms, which indicates low levels of an absence of selection and the low rate of creative destruction might allow inefficient firms to survive. It is consistent with prior findings from underdeveloped economies (Akcigit et al 2016 and Aydoğan 2020 ).…”

“…The strong negative effect of age and age squared on firm growth is perhaps the most striking result, suggesting in developing economies the new entrant and, actually, surviving firms are growing fast where growth rate does not continue as firms stay more years in the economy. Interestingly, this finding indicates the presence of lack of (natural) selection among Ethiopian manufacturing firms, which is in agreement with Akcigit et al ( 2016 ) and Aydoğan ( 2020 ).…”

“…Even though studies that used large census datasets on manufacturing are available for developed economies (for example Axtell 2001 ; Tang 2015 ; Coad et al 2011 , 2018 ), they are rare for developing ones due to a paucity of data. Despite this, few studies that have utilized complete microdata can be mentioned from developing countries (including Aydogan and Donduran 2019 ; Aydoğan 2020 among others) though they do not focus on manufacturing firms. This study, however, relies on the complete census-based microdata of Ethiopia’s manufacturing sector spanning from 1996 to 2017.…”

“… 1 There are few exceptions like Aydoğan ( 2020 ) utilizing Turkish microdata with full coverage though its focuses were not manufacturing firms, and Bigsten and Gebreeyesus ( 2007 ) using Ethiopian firm-level data from 1996 to 2003. …”