This paper considers the evolution in business dynamism and its potential link with productivity growth in Belgium. Statistics on business creation, the exit of enterprises and within-industry reallocation are presented. Data on Belgian firms, covering the period 2003-2017, are used for a decomposition of productivity growth. The paper provides robust indications of the substantial contribution of productivity growth of start-ups in the early years after entry.
Recent studies reveal the importance of entrants and young firms for job creation, productivity and economic growth. Some scholars argue that the falling rate at which new firms are established, can explain, to a certain extent, the productivity slowdown witnessed in most OECD countries. Belgium appears to stand out unfavourably from other countries in its very low start-up rate. This paper reviews the empirical cross-country evidence, provides some additional analysis of the role of young firms in industry-level employment and productivity dynamics in Belgium and concludes with a discussion of the implications for economic policy.
In this Working Paper the growth in industry-level total factor productivity, i.e. the part of output growth that cannot be accounted for by growth in the production factors, is decomposed using Belgian firm-level data for the period 2000-2008. Decomposition permits to assess to what extent productivity growth in a given industry results from changes in firm-level productivity, from reallocation of market shares between existing firms or from firm entry and exit.