Growing like mushrooms? Sectoral evidence from four large European economies

Abstract

This paper follows a stream of literature on the empirics of sectoral growth rates, originated by Castaldi and Dosi (Income levels and income growth. Some new cross-country evidence and some interpretative puzzles. Our aim is to discuss the statistical properties of growth rates in light of a 'mushroom vision' of growth. In our analysis, we focus on the growth of value added in NACE five-digit sectors in France, Germany, Italy and the United Kingdom between 1995 and 2003. We find that the volatility of sectoral growth rates is negatively correlated with sectoral size, according to a power law, but with steeper slopes than for firms and We wish to thank Giovanni Dosi, Angelo Secchi, Edwin Stuivenwold and Grid Thoma for helpful discussions, and participants of the 11 th International Schumpeter Society Conference in Sophia Antipolis (France) for useful comments. The paper was improved thanks to comments by the editor, Uwe Cantner, and by an anonymous referee. We kindly acknowledge support from the EU funded project DIME. Sandro Sapio also acknowledges support from the EU funded project CO3. All errors remain our own. U.S. sectors. Rescaled sectoral growth rates are well-described by a Laplace distribution in most years. The outcomes of this statistical analysis provide a further empirical foundation to a view of sectoral growth, wherein interfirm correlations, market concentration, and inter-sectoral feedbacks play a major role.

Characteristics of regional industry‐specific employment growth rates' distributions

“…In addition, they show a much higher regularity and homogeneity than the corresponding size distributions. Accepted as a stylized fact, these distributions have been further extended to and confirmed for the growth of whole industries within a country (Sapio and Thoma 2006;Castaldi and Sapio 2008). Complementing this sectoral perspective, a logical next step is to look at the spatial intermediate level between firms and countries, namely at the level of regions.…”

“…However, it can be observed that even bleft and bright stay visibly below the value of a normal distribution regarding most industries with more than a hundred or hundreds of firms per region. Further investigation is needed to systematically disentangle the two effects causing the persistence of fat tails: they may emerge due to correlating mechanisms working purely at the level of regions, or firm level growth rates aggregate non-trivially: instead of compensating out in the aggregation process, they may amplify and produce extreme regional growth events (Fu et al 2005;Castaldi and Sapio 2008). tion about whether each industry has higher or lower parameter values bleft, bright, aleft and aright than the average.…”

“…Further investigation is needed to systematically disentangle the two effects causing the persistence of fat tails: they may emerge due to correlating mechanisms working purely at the level of regions, or firm level growth rates aggregate non‐trivially: instead of compensating out in the aggregation process, they may amplify and produce extreme regional growth events (Fu et al. ; Castaldi and Sapio ).…”

The Transatlantic Productivity Gap: A Survey of the Main Causes

“…European countries display disparities related to their technological sectoral specialization, with more homogenous sectoral growth patterns evident in Germany and UK. Castaldi and Sapio (2008) conclude that the role of the diffusion of technological shocks is the key determinant in the trends of sectoral growth patterns. The results of this analysis are complemented by the results obtained in Inklaar and Timmer (2009).…”

“…Different authors have analysed the heterogeneity in the sectoral growth patterns within the European countries. Castaldi and Sapio (2008) analyse the value added growth patterns of some sectors for a set of European countries. They follow the idea of potential convergence in the sectoral co‐evolution as a result of technological interdependencies in closer geographical areas, known as the mushroom‐like growth process and developed in Harberger (1998).…”