Helena Schweiger

Assessing Job Flows Across Countries: The Role of Industry, Firm Size, and Regulations

This paper analyzes job flows in a sample of 16 industrial and emerging economies over the past decade, exploiting a harmonized firm-level dataset. It shows that industry and firm size effects (and especially firm size) account for a large fraction in the overall variability in job flows. However, large residual differences remain in the job flow patterns across countries. To account for the latter, the paper explores the role of differences in employment protection legislation across countries. Using a difference-in-difference approach that minimizes possible endogeneity and omitted variable problems, our findings show that hiring and firing costs tend to curb job flows, particularly in those industries and firm size classes that require more frequent labor adjustment.

The Land that Lean Manufacturing Forgot

We have conducted the first survey on management practices in transition countries. We found that Central Asian transition countries, such as Uzbekistan and Kazakhstan, have on average very poor management practices. Their average scores are below emerging countries such as Brazil, China and India. In contrast, the central European transition countries such as Poland and Lithuania operate with management practices that are only moderately worse than those of western European countries such as Germany. Since we find these practices are strongly linked to firm performance, this suggests poor management practices may be impeding the development of Central Asian transition countries. We find that competition, multinational ownership, private ownership and human capital are all strongly correlated with better management. This implies that the continued opening of markets to domestic and foreign competition, privatisation of state-owned firms and increased levels of workforce education should promote better management, and ultimately faster economic growth.

Management Quality, Ownership, Firm Performance and Market Pressure in Russia

We investigate whether management quality explains firm performance in Russia. We find that it explains relatively little in terms of firm performance, but it does explain some of the differences between firms in Russia’s Far East and the rest of Russia. Firms that have always been in private ownership perform better than state-owned firms. While management practices may not yet affect firm performance in a measurable way, they may do so in the future. This conjecture motivates us to look at the determinants of firms’ adoption of good management practices. We find that market pressure, both in the product and the labour market, has some impact on adoption of management practices, in particular in the Far East. It thus appears that the economy in Russia’s Far East may function according to different rules than in the rest of Russia, as market forces seem to be stronger there, in particular, because the Far East is more exposed to foreign competition than the rest of Russia.

The Impact of State Aid for Restructuring on the Allocation of Resources

The success of an economy depends largely on how successful it is in allocating inputs and outputs across businesses efficiently with minimum disruption and frictions. Market institutions that impact this allocation potentially account for productivity differences across countries. Existing studies use quite broad measures of institutions, mostly at the country level. This paper is the first to use census micro level data on a market institution with a potentially very distortive effect – state aid for the rescue and restructuring of firms in difficulty. I investigate the impact of this aid on static and dynamic efficiency of Slovenian manufacturing by combining the aid data with firm-level accounting data, using treatment effects estimators that assume selection on observables (linear regression models) and estimators that explicitly allow for selection on unobservables (instrumental variables models). The identification strategy in the latter models involves using variables that affect the chances of getting aid before 2002, but not after. The empirical analysis reveals that state aid hindered the efficient static allocation of resources, as measured by the Olley and Pakes (1996)-inspired micro covariance measure. None of the firms that received aid exited, aid had a positive impact on the growth rate of market shares, but did not have a significant impact on the growth of total factor productivity (TFP). These results suggest that aid was distortive.

The Impact of Armed Conflict on Firms' Performance and Perceptions

This study is the first to explore the short-run impact of armed conflict on firms’ performance and their perceptions of the business environment. We focus on the August 2008 conflict between Georgia and Russia and use the Business Environment and Enterprise Performance Survey data before and after this armed conflict. We can exploit the variation in armed conflict exposure to identify these relationships. The difference-in-differences estimates suggest that despite the short duration, armed conflict had a significant and negative impact on exports, sales and employment for at least a subset of firms. Perceptions of a few business environment obstacles were also affected, but not necessarily negatively. The results suggest that young firms experienced a scarring effect, which could lead them to close down prematurely. Longer-term impacts of the conflict on firms’ performance and local economic development can therefore not be ruled out.

Not So Different from Non‐Traders

This paper uses a unique, comparable firm‐level dataset covering more than 80 developing middle‐income economies to provide a novel set of stylized facts on firms engaging in international trade, focusing on the Middle East and North Africa (MENA) region. We show that firms in MENA are more likely to export and/or import than their counterparts elsewhere. However, we only find the expected positive and significant productivity premia for exporters outside of MENA. While MENAs larger exporters are indeed more productive than non‐exporters, a large share of exporters – the comparatively low‐volume ones – are not. We also confirm positive and significant size and productivity premia for manufacturers that import only, with productivity premia in MENA at least double of those in middle‐income economies elsewhere. In contrast, we find no size or productivity premia for MENAs manufacturers that export, but do not import. These patterns are consistent with substantial distortions in the relative fixed and variable costs of trading, likely a reflection of selectively applied policies.

The future of CIS and CEE countries

This article is based on a panel discussion on the future of transition countries 25 years after the dissolution of the Soviet Union. All the contributors have long professional and personal experience of various aspects of the transition process so far and provide different perspectives on what to expect for the region in the future. However, the need for continued reform in many areas of the respective economies are highlighted to ensure inclusive and sustainable growth in the future. A continued focus on enhancing productivity is the key to future economic success. Investments in human and physical capital need to be complemented with strengthening the fundamental institutions that make such investments possible and desirable for all relevant stakeholders. It will not be an easy reform process, but the alternatives are much less desirable for the vast majority of people in these countries.