Do Market Pressures Induce Economic Efficiency? The Case of Slovenian Manufacturing, 1994-2001
The Slovenian transition represents a slow, but steady liberalization of constraints on competition. Using a unique longitudinal data set on all manufacturing firms in Slovenia over the period 1994-2001, the authors analyze how firm efficiency chan...
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| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/01/2877545/market-pressures-induce-economic-efficiency-case-slovenian-manufacturing-1994-2001 http://hdl.handle.net/10986/13900 |
| Summary: | The Slovenian transition represents a
slow, but steady liberalization of constraints on
competition. Using a unique longitudinal data set on all
manufacturing firms in Slovenia over the period 1994-2001,
the authors analyze how firm efficiency changed, in response
to changing competitive pressures, holding constant firm
attributes. Results show that the period was one of
atypically rapid growth of total factor productivity (TFP),
relative to levels in OECD countries, and that the rise in
firm efficiency occurs across almost all industries and firm
types - large or small, state or private, and domestic or
foreign-owned. Changes in firm ownership type, have no
impact on firm efficiency. Rather, competitive pressures
that sort out inefficient firms of all types, and retain the
most efficient, coupled with the entry of new private firms
that are at least as efficient as surviving firms, prove to
be the major source of TFP gains. Market competition from
new entrants, foreign-owned firms, and international trade,
also raise firm efficiency in the industry. Results strongly
confirm that market competition fosters efficiency. |
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