The determinants of exit in a developing country: core and peripheral regions

Abstract

Abstract

Sectoral and regional determinants of firm dynamics in developing countries: Evidence for low-, medium- and high-tech manufacturing in Argentina

“…Table 6 shows analogous results for firm exit. Once again, results for firm exit in low-tech activities (which account for 68% of total exits) are consistent with those found in previous studies focusing on aggregated exit (Calá, Arauzo-Carod and Manjón-Antolín, 2015). In particular, previous entrants in the sector generate a replacement effect in peripheral regions but prevent exit in the core.…”

“…Lastly, the informal economy has much the same impact on low-tech exit as it does on the whole manufacturing as a whole (Calá, Arauzo-Carod and Manjón-Antolín, 2015). Although a small informal economy prevents exit, its effect is the opposite when it grows beyond a certain level.…”

“…The estimates from the count models are shown in tables 5 (entry) and 6 (exit). Columns [1] present results from the specification that contains variables which are widely used in studies on developed countries, while columns [2] include variables that capture the specificities of developing countries (poverty, the size of the informal sector and idle capacity), as well as the core-periphery pattern found in Argentina Manjón-Antolín, 2015 andArauzo-Carod, 2016). Upon analysis of the findings for firm entry (table 5, columns [2]), it becomes apparent that results for low-tech activities, which account for approximately 65% of total entries over the period under consideration, are largely consistent with those found in previous studies on the manufacturing sector as a whole (Calá, Manjón-Antolín and Arauzo-Carod, 2016).…”

“…As a result, positive agglomeration effects are expected to arise only in central areas. Previous studies on aggregated entry and exit in Argentina have found that the spatial distribution of aggregated entries and exits exhibit a core-periphery pattern Manjón-Antolín, 2015 and2016).…”

“…Remarkably, studies on the regional and sectoral determinants of firm entry and exit are limited to developed countries, while much less research has focused on developing countries even though these countries are expected to become key players in the world economy, since it is widely assumed that they will noticeably increase their share of output over the next decades (Wilson and Purushothaman, 2006). More precisely, studies on developing countries either focus on industry (Lay, 2003;Wang, 2006;Günalp and Cilasun, 2006;Ozturk and Kilic, 2012) or on regional determinants (Naudé and others, 2008;Santarelli and Tran, 2012;Manjón-Antolín, 2015 and2016). Thus, this would appear to be the first attempt to quantify regional determinants of firm entry and exit in different manufacturing industries of a developing country.…”