Net Entry Rates Research Articles

Export entrepreneurship promotion: The role of regulation-induced time delays and institutions

This paper examines the relationship between regulation-induced time delays and export entrepreneurship in a panel of 59 countries for the period 2006 to 2014. The paper finds robust evidence that regulations which cause lengthy time delays in moving a standard container of goods from the factory to the seaport significantly reduce export entry rate. These findings support the hypothesis that decreasing regulation-induced time delays expands export entrepreneurship by reducing the cost of exporting. Additionally, the paper finds that superior quality institutions significantly enhance the positive impact of lower regulatory time barriers on export entrepreneurship. Stronger protection of private property rights is the most important measure of institutional quality that aides the favorable impact of lower regulation-induced time barriers on export entrepreneurship. Furthermore, a reduction in regulation-induced time barriers has a positive effect on net entry rate and survival rates of export entrants, and high-quality institutions significantly increase the magnitude of this positive outcome.

The effect of regulation‐driven trade barriers and governance quality on export entrepreneurship

AbstractThis paper examines the impact of regulation‐driven trade barriers on export entrepreneurship in a panel of 60 countries between 2006 and 2014. The paper finds robust evidence that unfavorable trade regulations significantly reduce export entry rate and export entry density (two critical measures of export entrepreneurship) by increasing the time and cost associated with documentary and customs compliance procedures. These findings support the hypothesis that less conducive business regulations are an important domestic supply constraint which impedes export entrepreneurship by increasing trade costs. In addition, the paper finds that the magnitude of the negative relationship between export entrepreneurship and regulation‐driven trade barriers is significantly more pronounced in countries with poor governance quality. Two measures of governance quality (i.e., political stability and rule of law) are shown to be relatively more significant in aiding favorable trade regulations that promote export entrepreneurship. Furthermore, a reduction in regulation‐driven trade barriers has a positive impact on net entry rate and survival rates of first‐, second‐ and third‐year exporters, and high‐quality governance institutions significantly increase the magnitude of this positive relationship.

Application of Neural Networks to Explore Manufacturing Sales Prediction

Manufacturing sales prediction is an important measure of national economic development trends. The plastic injection molding machine industry has its own independent R and D energy and mass production technology, with all products sold globally through international brands. However, most previous injection molding machine studies have focused on R and D, production processes, and maintenance, with little consideration of sales activity. With the development and transformation of Industry 4.0 and the impact of the global economy, Taiwan’s injection molding machine industry growth rate has gradually flattened or even declined, with company sales and profits falling below expectations. Therefore, this study collected key indicators for Taiwan’s export economy from 2008 to 2017 to help understand the impact of economic indicators on injection molding sales. We collected 35 indicators, including net entry rate of employees into manufacturing industries, trend indices, manufacturing industry sales volume indices, and customs export values. We used correlation analysis to select variables affecting plastic injection machine sales and artificial neural networks (ANN) were applied to predict injection molding machine sales at each level. Prediction results were verified against the correlation indicators, and seven key external economic factors were identified to predict accurate changes in company annual sales prediction, which will be helpful for effective resource and risk management.

Employment determinants of Korean ICT manufacturing industry after the Financial Crisis

이 연구는 세계금융위기 이후에도 증가세를 이어가다가 2014년 이후 감소세로 돌아선 한국 ICT 제조업(전자부품, 컴퓨터, 영상, 음향 및 통신장비제조업)의 고용 변동요인을 실증적으로 분석한다. 이를 위해서 사업체노동력조사 월별통계로 구축한 월별 종사자 수 및 순입직률 데이터를 자기회귀시차분포(ARDL, Autoregressive Distributed Lag) 모형을 활용하여 실증 분석한다. 실증분석을 위해 활용된 변수는 사업체노동력조사 월별통계의 임금총액에 더해 수출, 설비투자, 해외투자, 국내시장 수요이다. 월별 ICT 수출은 ICT 주요품목동향조사, 월별 설비투자는 기계수주동향조사의 수요자별 기계주문 액수에서 ICT 제조업의 기계주문 액수, 월별 국내수요 변수는 제조업국 내공급지수의 업종별 국내지수, 수입지수 및 수입점유비율을 활용하며 ICT 제조업의 해외투자는 수출입은행의 해외투자통계를 이용한다. 한국 ICT 제조업의 종사자 이동을 나타내는 순입직률에 있어서 수출은 단기적으로 강한 긍정적 영향을 미쳤고 기계수주가 장기적으로 긍정적이었으나, 장단기 모두에 걸쳐 부정적 영향을 미친 것은 국내시장에서 수입품이 차지하는 비중이다. 한국 ICT 제조업의 고용 규모를 나타내는 종사자 수에 대해 장단기에 걸쳐 수출은 긍정적인 영향을 미친 반면, 국내 시장에서 수입비중은 부정적 영향을 미치는 것으로 드러났다. 하지만 한국 ICT 제조업의 해외투자나 설비투자는 국내 ICT 산업의 고용규모(종사자 수)에 유의한 영향을 미치지 않았던 것으로 보인다. 이 연구는 금융위기 이후 한국 ICT 제조업의 고용 감소가 수출의 정체 뿐 아니라, 국내 시장에서 진행된 수입품으로의 대체, 이에 따른 국내 ICT 제조업의 위축 등에서 기인함을 시사한다.This study empirically analyzes determinants of Korean ICT manufacturing employment that had kept increasing even after the global financial crisis in 2008 but has declined since 2014. For the empirical study, monthly establishment employment data from the ministry of employment and labor along with other official industry-level data are used, and Autoregressive Distributed Lag (ARDL) model is applied. The empirical model includes monthly data of the number of employees, net entry rate to ICT manufacturing jobs, industry-level real wage, exports, order index of machinery, foreign investment, and domestic demand index. Specifically the order index of machinery reflects the investment demand of Korean ICT manufacturing industry, while domestic supply of domestic goods, domestic supply of imported goods, and share of the imported goods in the domestic supply are considered for the domestic demand index. Main results from the analysis of net entry rate are: i) net entry rate to ICT manufacturing jobs is positively affected by exports in the short-run, ii) the net entry rate is positively affected by the machinery order in the long-run, iii) the net entry rate is negatively affected by the imported goods share in the short and long-run. Furthermore, main results from the analysis of the number of employees are: i) Korean ICT manufacturing employment is positively related with exports, ii) but negatively related with the imported ICT goods share in the domestic market. Interestingly the order of machinery and the foreign investment do not have significant impacts on Korean ICT manufacturing employment. The empirical results imply that Korean ICT manufacturing employment has decreased due to stagnant exports and substitution to imported ICT goods in Korean domestic market, which also can lead to negative effects on Korean ICT manufacturing firms in general.

Exploring the spatial heterogeneity of entrepreneurship in Chinese manufacturing industries

The prevalence of entrepreneurship not only varies across regions, but also differs among industries. Based on a unique data set of 146 manufacturing industries across 30 provincial-level regions in China, this study investigates the importance of geographical conditions and industry dynamism on net entry rates of Chinese manufacturing firms, and empirically explores how these two sets of factors jointly influence the distributional pattern of entrepreneurship. By testing for the significance of interactions between industry dynamism and local condition variables, it is found that growth-driven entrepreneurial activities favor agglomerated regions and do not value knowledge creation capability much, although both knowledge creation capability and factor market maturity are important for a region to attract entrepreneurs pursuing technological opportunities. For start-ups exploiting niche opportunities, agglomeration and local competition both act as deterring factors. Overall, the results confirm the importance of local conditions and industry structural variables as joint determinants of entrepreneurship in Chinese manufacturing industries.

U.S. State Government policies and entrepreneurship

Purpose – The purpose of this paper is to test the effects of government policies on entrepreneurial activity within the 50 US states. Design/methodology/approach – Using panel data and a fixed-effects model, the authors examine the determinants of the nominal establishment entry rate, the nominal establishment exit rate, and the net establishment entry rate. To measure government policy, the authors use the Economic Freedom of North America (EFNA) index published by the Fraser Institute. The authors use both the overall index and its components. The authors also use the state and local tax burden published by the Tax Foundation. Findings – The authors find that a smaller government is associated with a net increase in business establishments. A freer labor market is also associated with a net increase in business establishments. However, the relationship between the tax burden and entrepreneurship is more complex. Using a measurement of the tax burden from the Fraser Institute, the authors find that an increase in taxes is associated with a net decrease in businesses, but the measurement from the Tax Foundation suggests that an increase in taxes is associated with a net increase in businesses. Research limitations/implications – The results can help policy makers recognize the effects of expenditure and regulation on business formation. Practical implications – However, the results do not send a clear message on the effects of taxes on entrepreneurship. Originality/value – The contribution to the literature is the examination of the effect of the components economic freedom on net business entry in the USA, along with comparing the effects of two measurements of tax burden on net business entry.

Investment Shocks, Capacity Utilization, and Endogenous Entries

This paper studies a model that includes investment-specific technological shocks, a variable capacity utilization rate, and endogenous product entry subject to sunk product development costs. These factors constitute a powerful amplification mechanism as they interact with each other. The model generates an economic boom in a state in which people anticipate a future endogenous productivity rise; replicates the empirical patterns of economic fluctuations, both at the business cycle frequency and at a medium frequency; and replicates the empirical negative correlation between the net entry rates and the real investment prices over business cycles.

The effect of industry maturity, turnover and competition on firm survival: evidence from Slovenian firms

A complementary log-log firm survival model using a 10-year panel of firm-level data for the Slovenian manufacturing sector during the late transition period provide evidence that firms have a smaller chance of surviving in less concentrated industries with tougher competition, in mature industries characterised by higher industry average firm age and lower net entry rates, and in industries with high turnover rates, indicating low sunk cost and other entry/exit barriers. Observing the hazard functions of various industry groups further suggests that an industry's entry/exit conditions are even more relevant to firm survival than an industry's life-cycle phase. Moreover, a firm's age seems to be of greater importance for its survival during the early stages of the industry's life cycle than in the industry's maturity. Our findings suggest that economic policy measures aimed at providing support for start-up firms will be more efficient in young industries at the formative stage of the life cycle or in entrepreneurial regime industries, and that entry conditions should be the focus of competition policies.

Exit–entry, productivity growth and structural change in response to changes in macroeconomic policy: evidence from Argentina

This article highlights the macro-to-micro interactions in Argentine industrial sector by examining the response of different manufacturing industries to changes in macroeconomic policies in the early 2000s. It is argued that as a result of the macroeconomic policy changes like the abandonment of currency board regime, i.e., the dollarization of the economy, the structure of industry underwent changes and so did the labour productivity and the competitive capability of different industries. Our results show that a combination of a higher real exchange rate and the expansion of domestic markets coexisted with an increase in the net entry rate in manufacturing activities in 2003–2006, compensating for the high exit rate that prevailed between 1999 and 2002. Above average productivity gains were reported in low and medium tech industries. On the contrary (medium) high tech industries – which were much behind international productivity standards – failed to invest in product and process innovations and could not face the challenge of foreign competition. Our approach throughout the monograph is ‘appreciative’ and descriptive, rather than formal and econometric. We still find considerable richness in studying development processes as from this perspective, much in the ‘pin factory’ tradition.

Infant industry protection and industrial dynamics

A perennial case for industrial policy is based on the protection of young or emerging industries. Despite a natural association with concepts of life cycles, industrial policy has not been analyzed in the context of an industry life-cycle model. In particular, an important life-cycle characteristic, the potential for very large changes in the rate of net entry, is ignored. In this paper, we demonstrate how the impact of industrial policy depends critically on the entry and exit dynamics within an industry. We construct a model of technology adoption in which the number of firms is endogenous, and derive a set of novel predictions about the effects of protection on firm technology decisions. Specifically, we show that permanent protection can induce earlier adoption, but also decreases the probability that a given firm adopts the new technology. Likewise, we demonstrate that reducing the duration of protection results in faster adoption than permanent protection, but also reduces a given firm's probability of adoption. Finally, we show that, for industries characterized by flexibility in firm numbers, protection does not change the rate of technology adoption but does increase the size and probability of a shakeout (large scale net exit).

The Impact of Economic Growth on the Dynamics of Enterprises: Empirical Evidence for Slovenia's Non-agricultural Sector

The Impact of Economic Growth on the Dynamics of Enterprises: Empirical Evidence for Slovenia's Non-agricultural Sector The aim of this paper was to test the hypothesized U-shaped relationship between economic development and dynamics of enterprises. The dynamics of enterprises is influenced by the achieved economic development. This paper first analyzed the association between the regional gross value added (GVA) growth rate and different measures of enterprises dynamics from Slovenian data from 2000 to 2005. Our graphical analyses indicated that 1) the rate of gross entry and GVA growth rate were linearly and negatively associated; 2) the association between the rate of gross exit and GVA growth rate is best represented by the downward U-shape function (Ç); and 3) a U-shaped association exists between the rate of net entry and GVA growth rate. The size of the impact was estimated using the regression analysis between the net entries as dependent variable and GVA growth as independent variable that showed the best fit. According to the results, 1) economic growth significantly impacts net entries; 2) the hypothesized U-shaped relationship between net entries and economic growth was confirmed as the Slovenian net entries decrease until the GVA growth rate reaches 10% yet increase when the growth in GVA is higher than 10%; and 3) a ‘natural rate’ of entrepreneurship is to some extent governed by ‘laws’ related to the economic growth rate. The results further indicate that the average net entry rate should be increased by 0.787 units (%) as a result of a region's specific environmental factors. This research confirms the theoretical assumptions that have previously been sparsely tested empirically and even rarely supported by results. Therefore, our results represent a contribution to the robustness of the theoretical as well as empirical clarification of the relationship between entrepreneurship and economic development.

A survey on institutions and new firm entry: How and why do entry rates differ in emerging markets?

This paper considers the impact of institutions on new firm entry in emerging markets. In particular, it surveys the findings of a 2-year research project on the sources of success in terms of entry rates and conditions (including gross entry rates, exit rates and therefore net entry rates) across the BRIC countries (Brazil, Russia, India, China). These emerging market economies display widely varying entry and exit rates and a framework is developed to capture the interaction between key aspects of formal institutions, how those institutions play out in practice, and their impact on entry and exit rates. The country case studies reveal that, whilst different contingencies affect the relationships between institutions and entry in each country, there are some empirical regularities in the determinants of successful entry and conversely in its constraints. One such regularity is the critical interaction between formal rules and informal mechanisms. There is also variation in whether these works so as to compensate for deficiencies in formal institutions, as in China and India, or whether deficiencies in formal mechanisms are compounded by poor informal mechanisms, as is sometimes true in Brazil. Indeed, relatively good formal rules and structures can be undermined by informal mechanisms deterring or blocking entry, as is largely the case in Russia.

Infant Industry Protection and Industrial Dynamics

A perennial case for industrial policy is based on the protection of young or emerging industries. Despite a natural association with concepts of life cycles, industrial policy has not been analyzed in the context of an industry life-cycle model. In particular, an important life-cycle characteristic, the potential for very large changes in the rate of net entry, is ignored. In this paper, we demonstrate how the impact of industrial policy depends critically on the entry and exit dynamics within an industry. In particular, we construct a model of technology adoption in which the number of firms is endogenous, and derive a set of novel predictions about the effects of protection on firm technology decisions. Specifically, we show that permanent protection can induce earlier adoption, but also decreases the probability that a given firm adopts the new technology. Likewise, we demonstrate that reducing the duration of protection results in faster adoption than permanent protection, but also reduces a given firms probability of adoption. Finally, we show that, for industries characterized by flexibility in firm numbers, protection does not change the rate of technology adoption but does increase the size and probability of a shakeout (large scale net exit).

Reforms and Entry: Some Evidence from the Indian Manufacturing Sector

Traditional research in the context of product market entry has explored the strategic reactions of incumbent firms when threatened by the possibility of entry, and have identified industry-specific factors that affect entry rates. However, following de Soto (1989), there has been increasing emphasis on regulatory and institutional factors governing entry rates, especially in the context of developing countries. Using three-digit industry-level data from India, for the 1984–97 period, we examine the phenomenon of entry in the Indian context. Our empirical results suggest that during the 1980s industry-level factors largely explained variations in entry rates, but that, following the economic federalism brought about by the post-1991 reforms, variations in entry rates during the 1990s were explained largely by state-level institutional and legacy factors. Past productivity growth affects net entry rates as well.

Entry, market turbulence and industry employment growth

This paper investigates the relationship between industrial dynamics in terms of firm entry, market turbulence and employment growth. Do entry of firms, the composition of industry dynamics (net entry) and market turbulence (entry and exit) influence industrial employment growth? This paper provides an empirical investigation, using unique data for 42 disaggregated Swedish industrial sectors during the period 1997-2001. It is hypothesised that the importance of entering firms, net entry and market turbulence may differ significantly across industries. A quantile regression method is used in order to detect industrial differences in the response to industrial employment growth. The empirical evidence shows that, on the one hand, firm entry and market turbulence have a positive effect on employment for fast growing industries and that the effect is larger for high growth industries. On the other hand, the composition of industry dynamics in terms of net entry rates has a more dispersed effect across all industries, even though the effect of net entry is larger for high growth industries.

Entry and Exit in the Nonprofit Sector

Abstract We study the entry and exit dynamics of nonprofit public charities using 1989-2003 tax return data. The observed patterns can be understood using a dynamic industry model based on Jovanovic (1982) that incorporates profit-deviation and a non-redistribution constraint. Both features generate a high exit threshold which implies high net entry rates and low exit rates. The data reveal that nonprofit gross entry rates are lower than those of for-profits in services, while extremely low exit rates (across both sectors and time) result in net entry rates nearly 3 times larger than that of for-profit firms. We find that the behavior of new public charities is remarkably similar to that found in studies of private firms (e.g. new firms begin smaller than the industry mean, but grow faster). However, exit patterns diverge sharply. Besides relatively low exit rates, the survival rate of new nonprofit firms greatly exceeds those found in studies on services and manufacturing. In addition we find that the hazard rate of exit declines with age and size, and with size conditional on age.

Minimum Wages and Firm Profitability

We study the impact of minimum wages on firm profitability, exploiting the changes induced by the introduction of a UK national minimum wage in 1999. We use pre-policy information on the distribution of wages to implement a difference-in-differences approach. Minimum wages raise wages, but also significantly reduce profitability (especially in industries with relatively high market power). This is consistent with a simple model where wage gains from minimum wages map directly into profit reductions. There is some suggestive evidence of longer run adjustment to the minimum wage through falls in net entry rates. (JEL J31, J38, L25)

‘Entry Thresholds and Actual Entry and Exit in Local Markets’

Bresnahan and Reiss (1991) derive entry thresholds for local markets but do not investigate actual entry and exit flows. This paper investigates for thirteen Belgian retail and consumer service industries whether markets with actual numbers of firms higher (lower) than the thresholds display exit (entry) in subsequent periods. The results confirm that over a three-year period the rate of (net) entry is positively affected by the presence of ‘market room'. The exit rate, however, does not show a negative relation with ‘market room'.

In Vivo Characteristics of Placental Amino Acid Transport and Metabolism in Ovine Pregnancy—A Review

The placental transport of amino acids which is nutritionally important is the net entry rate into the fetal circulation (the umbilical uptake). This entry rate is a function of transport across cell membranes, the effect of competition among amino acids for transport, particularly across the fetal surface of the trophoblast, and their metabolism and interconversion within the placenta. The result of these different interactive fluxes is that the relationship between maternal concentration and fetal supply of an amino acid differs for each amino acid. For some amino acids there are relatively large bidirectional fluxes at both the fetal and maternal surfaces of the placenta. These fluxes can be measured in vivo utilizing stable isotope methodology. There is an important interorgan exchange of amino acids between the placenta and fetal liver. This exchange is, at least in part, a function of the absence of gluconeogenesis in the fetal liver. Both glutamate and serine, which are released from the fetal liver, are taken up by the placenta from the fetal circulation and metabolized within the placenta.

Who Dies? International Trade, Market Structure and Industrial Restructuring

This paper examines the role of changing factor endowments in the growth and decline of industries and regions. The implications of an endowment-based Heckscher-Ohlin trade model for plant entry and exit are tested on 20 years of data for the entire US manufacturing sector. The trade model provides predictions for which industries will see growth through the positive net entry of plants. A multi-region version of the same model has predictions for which regions will see high turnover and net entry of plants. In a country such as the U.S. that is augmenting both its physical and human capital, the least capital-intensive, least skill-intensive industries are correctly predicted to have the lowest rate of net entry. In addition, increases in regional capital and skill intensity are associated with higher probabilities of shutdown, especially for plants in industries with low initial capital and skill intensities.