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Breaking down the barriers to firmgrowth in Europe The fourth EFIGE policy report

This report is the sixth and last in a series devoted to the firm-level determinants of export and economic performance. The series started in 2007 with the Happy Few report. It is based on the EFIGE survey of European firms organised by a Bruegel-led team of European researchers from seven centres, with the support of the European Commission and the UniCredit Group.

By: , , and Date: August 28, 2012 Topic: Innovation & Competition Policy

Large firms contribute disproportionately to the economic performance of countries: they are more productive, pay higher wages, enjoy higher profits and are more successful in international markets. The differences between European countries in terms of the size of their firms are stark. Firms in Italy and Spain, for example, are on average 40 percent smaller than firms in Germany. The low average firm size translates into a chronic lack of large firms. In Italy and Spain, a mere 5 percent of manufacturing firms have more than 250 employees, compared to a much higher 11 percent in Germany. Understanding the roots of these differences is key to improving the economic performance of Europe’s lagging economies.

So why is there so much variation in firm size in different European countries? What are the barriers that keep firms in some countries from growing? And which policies are likely to be most effective in breaking down those barriers? This policy report aims to answer these questions by developing a quantitative model of the seven European countries covered by the EFIGE survey (Austria, France, Germany, Hungary, Italy, Spain and the UK). The EFIGE survey asked 14,444 firms in those countries about their performance, their modes of internationalisation, their staffing decisions, their financing structure, and their competitive environment, among other topics.

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How do incentives to collude depend on how asymmetric firms are? For low levels of differentiation, an increase in quality difference makes collusion less stable. The opposite holds for high levels of differentiation.

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By: Alicia García-Herrero Topic: Global Economics & Governance Date: October 20, 2020
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Diversification is important because it is associated with economic growth and reduced volatility.

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By: Leonardo Cadamuro, Francesco Papadia and Bruegel Topic: European Macroeconomics & Governance Date: March 10, 2020
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Factors determining Russia’s long-term growth rate

This paper’s main conclusion is that Russia’s economy cannot grow at the pace recorded in the early and mid-2000s because of the different external environment, the different stage of development and serious demographic headwinds.

By: Marek Dabrowski Topic: Global Economics & Governance Date: January 16, 2020
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In the last decade, most advanced economies have grown more slowly than before. Slower growth has frequently been seen as a legacy of financial crises, especially that of 2007–2009.

By: Marek Dabrowski Topic: Innovation & Competition Policy Date: January 6, 2020
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Past Event

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Improving regulatory policy formulation and institutional resilience in Europe

Are large differences in the resilience of individual economies related to differences in the quality of country-level institutions that shape the absorption and response to these shocks? At this event we'll discuss the evolution of labour markets, and the role of institutional design and good process.

Speakers: Arup Banerji, Maria Demertzis, J. Scott Marcus, Céline Kauffmann, Rogier van den Brink and Bruegel Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 13, 2019
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Upbeat outlook from Chinese banks' profits masks growing problems for small banks

The performance of Chinese banks has been resilient so far, despite decelerating growth. While the performance of large banks remained steady, the rebound came from small banks. Why have small banks rebounded and is the rebound sustainable?

By: Alicia García-Herrero, Gary Ng and Bruegel Topic: Global Economics & Governance Date: November 12, 2019
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Russia’s convergence to advanced economy income levels has stalled. Long-term growth prospects are still obstructed by sluggish productivity growth, low capital accumulation and shrinking labour inputs. The new government has articulated a set of ambitious policy objectives for the next six years. But are additional reforms necessary to further boost productivity and investments in line with government targets?

Speakers: Marek Dabrowski, Markus Ederer, Elena Flores, Alexander Larionov, Dmitry Polevoy, Niclas Poitiers, Alexey Vedev and Bruegel Topic: Global Economics & Governance Location: Kadashevskaya Naberezhnaya, 14, Moscow, Russia, 115035 Date: November 7, 2019
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By: Alicia García-Herrero, Gary Ng and Bruegel Topic: Finance & Financial Regulation Date: September 16, 2019
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