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Declining Business Dynamism in Belgium

Author

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  • Gert Bijnens
  • Jozef Konings
Abstract
Using 30 years of data from all for-profit firms incorporated in Belgium, we show that business dynamism and entrepreneurship have been declining over recent decades. This decline set in around the year 2000 following a decade of declining start-up rates. We also observe a decreasing share of young firms that become high-growth firms and more importantly a declining propensity for small (not necessarily young) firms to experience fast growth. Interestingly, a similar decline in business dynamism occurred in the U.S., where firms face a far less rigid institutional environment than in Belgium. These remarkable similarities suggest that global trends rather than country specific changes are at the basis of this evolution. We show evidence that points to the role of ICT intensity and in explaining the secular decline in business dynamism.

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  • Gert Bijnens & Jozef Konings, 2018. "Declining Business Dynamism in Belgium," Working Papers 20181, University of Liverpool, Department of Economics.
    • Handle: RePEc:liv:livedp:20181
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    More about this item

    Keywords

    business dynamism; firm dynamics; firm growth; entry; reallocation; high-growth firms; high-impact firms;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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