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Firm Turnover and Productivity Growth in the Canadian Retail Trade Sector

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  • Baldwin, John R. Gu, Wulong

Abstract

This paper examines firm turnover and productivity growth in the Canadian retail trade sector. Firm turnover occurs as the competitive process shifts market share from exiting firms and existing firms that contracted to entering firms and existing firms that expanded. There is considerably more firm turnover in the retail sector than in the manufacturing sector and more of it comes from entry and exit. Moreover, contrary to the manufacturing sector where only part of overall productivity growth comes from firm turnover and the re-allocation of resources from the less to the more productive, all of the aggregate productivity growth comes from this source in the retail sector. This suggests that the much-discussed Wal-Mart effect on retail sector productivity mainly comes from the Wal-Mart-created competitive pressure that shifts market share from exitors and declining incumbents to entrants and growing incumbents. Foreign-controlled firms contributed 30% of labour productivity growth and 45% of multifactor productivity growth in the retail trade sector in the period from 1984 to 1996, which are mainly due to the entry of foreign-controlled firms and expansion of more productive foreign-controlled existing firms.

Suggested Citation

  • Baldwin, John R. Gu, Wulong, 2008. "Firm Turnover and Productivity Growth in the Canadian Retail Trade Sector," Economic Analysis (EA) Research Paper Series 2008053e, Statistics Canada, Analytical Studies Branch.
    • Handle: RePEc:stc:stcp5e:2008053e
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    File URL: http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11F0027M2008053&lang=eng
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    Citations

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    Cited by:

    1. Cristina Suárez & Justo De Jorge, 2011. "Growth and evolution of technical efficiency among entrant versus incumbent firms: the Spanish retail sector," The Service Industries Journal, Taylor & Francis Journals, vol. 32(14), pages 2265-2285, April.
    2. Huang, Xiaobing & Liu, Xiaolian, 2016. "Exporting firm dynamics and productivity growth: Evidence from China," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-31.
    3. Xiaobing, Huang & Xiaolian, Liu, 2015. "Exporting firm dynamics and productivity growth: Evidence from China," Economics Discussion Papers 2015-64, Kiel Institute for the World Economy (IfW Kiel).
    4. Baggs, Jen & Fung, Loretta & Lapham, Beverly, 2018. "Exchange rates, cross-border travel, and retailers: Theory and empirics," Journal of International Economics, Elsevier, vol. 115(C), pages 59-79.
    5. John Baldwin & Amélie Lafrance, 2014. "Firm Turnover and Productivity Growth in Canadian Manufacturing and Services Industries, 2000 to 2007," Journal of Industry, Competition and Trade, Springer, vol. 14(2), pages 173-205, June.

    More about this item

    Keywords

    Manufacturing; Retail and wholesale; Economic accounts; Productivity accounts;
    All these keywords.

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