Productivity Dynamics in Manufacturing Plants

Abstract

MUCH OF THE TRADITIONAL analysis of productivity growth in manufacturing industries has been based explicitly or implicitly on a model in which identical, perfectly competitive plants respond in the same way to forces that strike the industry as a whole. The estimates of growth obtained with this framework are then used as the basis for discussions of policy concerning capital accumulation, research and development, trade, or other issues. This contrasts markedly with the literature of industrial organization in which perfect competition is seen as an unusual market structure and in which the differences among firms are examined in detail. The models of oligopoly that are the staple of the industrial organization literature are then used to examine antitrust policy.

Statistical regularities in the evolution of industries: a guide through some evidence and challenges for the theory

“…Mainly North-American evidence, mostly at plant level, does suggest that increasing output shares in high-productivity plants and decreasing shares of output in lowproductivity ones are very important drivers in the growth of average productivities, even if the process of displacement of lower efficiency plants is rather slow (cf. the evidence discussed in Baily et al (1992) and Baldwin (1995)). Moreover, (iv) the evidence from other data sets such as the international pharmaceutical industry shows that more innovative firms do not grow more ).…”

“…Come as it may, on overwhelming evidence concerning both labour productivity and TFP and at all levels of disaggregation suggest widespread differences in production efficiency across firms and across plants which tend to be persistent over time: see, among others, Nelson (1981), Baily et al (1992), Baldwin (1995), Bartelsman and Doms (2000), Jensen and McGuckin (1997), Power (1998), Rumelt (1991).…”

Survivorship and the Economic Grim Reaper

“…Altman (1968) used accounting measures to construct a bankruptcy prediction model. Baldwin (1995), Lichtenberg andSiegel (1987), andBailey, Hulten, andCampbell (1992) all find that low productivity plants are more likely to experience ownership change than average or high productivity plants. Palepu (1986) reports that to-be-taken-over firms have negative excess returns from five years before to one year before being acquired.…”

Dynamics of dairy farm productivity growth

“…Several methods of decomposition have been proposed in the literature. Foster et al (1998) based on Baily et al (1992) and Haltiwanger (1997) suggest to apply a formula to decompose industry level productivity growth making use of deviations between farm level TFP estimates and market shares and the initial sector TFP and average market share. Using this method, a dairy farm with a continuous increase in market share contributes positively to the between-farm component only if its productivity is higher than initial average sector productivity.…”