Firm Dynamics, Productivity Growth and Job Creation in Developing Countries: The Role of Micro- and Small Enterprises

Abstract

This paper re-examines the conventional wisdom on firm dynamics, productivity growth and job creation in developing countries, explicitly taking into account the role played by micro- and small enterprises (mostly informal). The paper first summarizes the existing literature on the topic, using the studies for advanced economies as the benchmark. It then reviews the studies conducted for developing countries using enterprise censuses and surveys which are formally similar to those of advanced countries, except that they are truncated. This review allows articulating the conventional view on enterprise dynamics in developing countries. Next, the paper relies on household surveys and labor force surveys to reconstruct the true distribution by size of economic units, and assesses the implications for empirical analysis. This assessment is in turn used to re-weight the samples of standard enterprise censuses and surveys, and to combine the resulting insights with those from studies on micro- and small enterprises.

Citation

Yue Li; Rama, M. Firm Dynamics, Productivity Growth and Job Creation in Developing Countries: The Role of Micro- and Small Enterprises. World Bank, Washington DC, USA (2012) 27 pp. [WDR 2013 Background Paper]

Firm Dynamics, Productivity Growth and Job Creation in Developing Countries: The Role of Micro- and Small Enterprises

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