DP2444 Competition And Firm Performance: Lessons From Russia

Author(s): J David Brown, John S Earle
Publication Date: May 2000
Keyword(s): Competition, Firm Exit, Foreign Trade, Monopsony, Privatization, Russia, Total Factor Productivity
JEL(s): D24, D40, J42, L10, L33, P23, P31
Programme Areas: Transition Economics
Link to this Page: http://www.cepr.org/pubs/dps/DP2444

The 'big-bang' liberalization of the inefficient Russian economy in 1992 provides a fruitful setting for analysing the impact of several dimensions of market competition and other factors on enterprise efficiency. We analyse 1992-1998 panel data on 14,961 enterprises covering 75 percent of industrial employment, emphasizing the varied sources, geographic scope, intensity, time path, and survival effects of competitive pressures. We find large, positive effects on TFP from competition in domestic product and local labour markets, and from imports and better transportation infrastructure, although the first effect appears only gradually. Non-state firms outperform state enterprises, even after correction for selection bias.