Firm Dynamics And Their Impact On Productivity Growth In The Manufacturing Sector

​Firm Dynamics And Their Impact On Productivity Growth In The Manufacturing Sector

This article examines firm dynamics, especially the entry and exit of firms and the reallocation of labour across continuing firms, and their impact on productivity growth in the manufacturing sector. In terms of firm dynamics, our key observations are as follows: (i) different manufacturing segments had different rates of firm churn (i.e., the sum of exit and entry rates), with firm churn being higher in segments with a higher proportion of small- and medium-sized enterprises; (ii) there was persistence in the productivity performance of continuing firms; and (iii) firms in the lower productivity quartiles were more likely to exit, although entry firms also tended to start in the lower productivity quartiles.

The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore

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