Industrial organisation

Jayant Menon, Thiam Hee Ng, 01 October 2015

Malaysia’s fortunes have taken a turn for the worse in recent years, both in manufacturing and across the economy in general. This column argues that the country is moving back to processing its agricultural and mineral resources, and that such ‘premature deindustrialisation’ is mostly policy driven. The biggest concern with such structural shifts is that they lead to low-productivity, low-wage manufacturing. Malaysia must address these issues and improve its business environment if it wants to realise its aspirations.

Eugenio J. Miravete, Maria J. Moral, Jeff Thurk, 30 September 2015

Diesel vehicles have never been popular in the US, but have dominated sales in Europe. This column presents new evidence explaining why this is the case. A change in preferences and the numerous competing suppliers benefited the diffusion of diesel cars. But more important was a European environmental policy that favoured CO2 reductions. As diesel vehicles are only produced by European manufacturers, this policy provided a competitive advantage for domestic producers equivalent to a 20% import duty.

Toshihiro Okubo, Yukako Ono, Yukiko Umeno Saito, 04 September 2015

The productivity of a firm depends on its interaction with its suppliers and customers. This column uses unique data from Japan to investigate the wholesalers’ role in transaction networks, considering both sides of the transaction. The likelihood that a firm uses wholesalers increases with smaller buyer-side firms and larger seller-side firms. In addition, wholesalers tend to be located closer to their manufacturing buyers and further from their manufacturing sellers than manufacturers are to their direct manufacturing partners.

Tatiana Didier, Ross Levine, Sergio Schmukler, 25 August 2015

It is still not clear which firms issue equity and bonds, what happens to their assets, sales, and employment, and how the performance of issuers compares to that of non-issuers. This column addresses these three questions. First, only a small number of large firms issue securities in a typical country. Second, issuers grow faster than non-issuers in terms of assets, sales, and employment. Third, smaller issuing firms grow faster than larger ones, but larger non-issuing firms grow faster than smaller ones.

Florencio Lopez de Silanes, Joseph McCahery, Dirk Schoenmaker, Dragana Stanišić, 21 August 2015

While small and medium-sized enterprises are important for economic growth and employment, we have little insight in their financing needs. Using a novel methodology, this column presents new research that estimates the gap between demand and supply of financing in several European countries. We find that the financing gap is three to five times larger than that of US SMEs. Initiatives under the Capital Markets Union umbrella can help to reduce this financing gap.

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