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Survival of Small and Medium-Sized Plants in Chile: Has it Changed over Time?, Does it Differ across Industries?

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Author Info
Roberto Álvarez
Sebastián Vergara

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Abstract

This paper analyzes the relationship between probability of survival and plant size. Using information for the Chilean manufacturing industry over the period 1979-1999, we study empirically if small and medium-sized enterprises (SMEs) have reduced their probability of survival over time. Our results do not reveal evidence in this regard. To deepen the analysis, first we study how differences in the exposure of industries to international trade affect the probability of survival. Second, we analyze the relationship between survival and size for 25 industries. Our results suggest that (i) higher exposure to international trade increases the probability of survival of SMEs, and (ii) there is large heterogeneity in the impact of size on survival across manufacturing industries. This evidence casts some doubts regarding support policies for SMEs that do not take into account differences across industries or between medium and small plants.

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Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 427.

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Date of creation: Aug 2007
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Handle: RePEc:chb:bcchwp:427

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  1. Gordon H. Hanson, 2005. "Globalization, Labor Income, and Poverty in Mexico," NBER Working Papers 11027, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Van Biesebroeck, Johannes, 2005. "Firm Size Matters: Growth and Productivity Growth in African Manufacturing," Economic Development and Cultural Change, University of Chicago Press, vol. 53(3), pages 545-83, April.
  3. Andrew B. Bernard & Fredrik Sjoholm, 2003. "Foreign Owners and Plant Survival," NBER Working Papers 10039, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-86, June. [Downloadable!] (restricted)
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  5. Greenaway, David & Gullstrand, Joakim & Kneller, Richard, 2008. "Surviving globalisation," Journal of International Economics, Elsevier, vol. 74(2), pages 264-277, March. [Downloadable!] (restricted)
  6. Roberto Álvarez & Gustavo Crespi, 2001. "La Importancia Relativa de las Pequeñas y Medianas Empresas: Un Análisis de sus Determinantes en la Industria Manufacturera," Cuadernos de Economía (Latin American Journal of Economics), Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 38(115), pages 347-365. [Downloadable!]
  7. Audretsch, David B, 2002. " The Dynamic Role of Small Firms: Evidence from the U.S," Small Business Economics, Springer, vol. 18(1-3), pages 13-40, Feb.- May. [Downloadable!] (restricted)
  8. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 317-341, 04. [Downloadable!] (restricted)
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  9. Roberto Alvarez & Holger Görg, . "Multinationals as Stabilizers?: Economic Crisis and Plant Employment Growth," Discussion Papers 07/15, University of Nottingham, GEP. [Downloadable!]
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  10. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July. [Downloadable!] (restricted)
  11. Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July. [Downloadable!] (restricted)
  12. Thomas F. Cooley & Vincenzo Quadrini, 2001. "Financial Markets and Firm Dynamics," American Economic Review, American Economic Association, vol. 91(5), pages 1286-1310, December. [Downloadable!] (restricted)
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  13. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September. [Downloadable!] (restricted)
  14. Amil Petrin & Brian P. Poi & James Levinsohn, 2004. "Production function estimation in Stata using inputs to control for unobservables," Stata Journal, StataCorp LP, vol. 4(2), pages 113-123, June. [Downloadable!]
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