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Productivity Growth and Resource Reallocation in France: The Process of Creative Destruction

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  • Haithem Ben Hassine

Abstract

[eng] Based on a large sample of French firms, this article examines the contribution of resource reallocation and of the learning effect to changes in total factor productivity (TFP) before (2000-2007) and after (2008/2009-2012) the 2008 crisis. First, we show that there was very little TFP growth before the crisis and that a fall occurred between 2008 and 2012. Second, we show that the evolution of TFP is highly dependent on the learning effect, as measured here by internal firm performance. Its negative contribution after the crisis is indicative of the difficulties experienced by firms in France in adjusting their production scale rapidly and effectively. However, this effect was reduced by 1) a process of resource reallocation towards the most productive continuing firms, which only really took hold from 2009 onwards, and 2) an earlier Schumpeterian process of creative destruction (cleansing effect), the first signs of which appeared in 2008.

Suggested Citation

  • Haithem Ben Hassine, 2019. "Productivity Growth and Resource Reallocation in France: The Process of Creative Destruction," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 507-508, pages 115-133.
    • Handle: RePEc:nse:ecosta:ecostat_2019_507-508_7
    DOI: https://doi.org/10.24187/ecostat.2019.507d.1979
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    Cited by:

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    More about this item

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

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