Knowledge that Transforms

The paper examines entry, exit and the survival of firms in terms of evolutionary changes in the marker from the first introduction of a product to maturity of the market. It is shown that both entry and exit rates depend systematically on the stage of development of the market in the cycle from birth to maturity. Survival rates depend both on stage of development and on individual firm attributes. The empirical work is carried out with data for 25 new products. A complete inventory of entering, exiting and surviving firms from the birth of a new product to its maturity was developed.

In this paper, we test whether aggregate productivity movements, especially convergence, are also reflected at the industry level.Using a new result on the asymptotic normality of panel unit root estimators, we find evidence for convergence in total factor productivity for sectors such as services and construction in 14 OECD countries from 1970-1987.However, surprisingly, we find that convergence does not hold for the manufacturing sector.Convergence in total industry occurs as a result of the declining share of manufacturing and the growing share of sevices in these countries.

This is one of the first empirical studies of the relationship between a developing country's system of intellectual property protection and the volume and composition of U.S. foreign direct investment in that country. Based on data obtained from almost one hundred U.S. firms regarding their perceptions of how weak or strong such protection is in various countries, the authors' results are consistent with the view that a country's system of intellectual property protection influences the volume and composition of U.S. foreign direct investment. Copyright 1996 by MIT Press.

This paper analyzes the return migration of foreign-born persons in the United States.We argue that return migration may have been planned as part of an optimal life cycle residential location sequence.Return migration also occurs because immigrants based their initial migration decision on erroneous information about opportunities in the United States.The study uses the 1980 Census and administrative data from the immigration and Naturalization Service.Immigrants tend to return to wealthy countries which are not too far from the United States.Moreover, return migration accentuates the type of selection characterizing the immigrant population left in the United States.

Wesley M. Cohen, Steven Klepper, Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D, The Review of Economics and Statistics, Vol. 78, No. 2 (May, 1996), pp. 232-243

Adverse shocks to the economy may be amplified by worsening credit-market conditions-- the financial 'accelerator'. Theoretically, we interpret the financial accelerator as resulting from endogenous changes over the business cycle in the agency costs of lending. An implication of the theory is that, at the onset of a recession, borrowers facing high agency costs should receive a relatively lower share of credit extended (the flight to quality) and hence should account for a proportionally greater part of the decline in economic activity. We review the evidence for these predictions and present new evidence drawn from a panel of large and small manufacturing firms.

The Central and East European (CEE) countries are in their sixth year of a dramatic transition from a centrally planned to a market-based system. In the first phase of the transition, most of these economies have achieved macroeconomic stabilization but also experienced a major decline in officially measured output and a slower but significant decline in employment. The attention has thus shifted to the ability of governments to check the rapid rise in unemployment, induce efficient behavior of firms, and improve the functioning of the infant markets. In particular, while a fundamental feature of the centrally planned economies was full employment, with state enterprises hoarding unproductive labor, a distinguishing feature of the transition has been the emergence of a double-digit unemployment rate, together with varying degrees of restructuring, privatization, and birth of firms. An understanding of these phenomena is essential for grasping the process of transition and formulating appropriate policies. In this paper, I provide a step in this direction by discussing some recent econometric evidence for CEE on (i) enterprise behavior (in the areas of restructuring and privatization, as well as employment and wage setting) and (ii) the flow of individuals from unemployment into employment.