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Making It Big : Why Developing Countries Need More Large Firms (English)

Economic and social progress requires a diverse ecosystem of firms that play complementary roles. Making It Big: Why Developing Countries Need More Large Firms constitutes one of the most up-to-date assessments of how large firms are created in low- and middle-income countries and their role in development. It argues that large firms advance a range of development objectives in ways that other firms do not: large firms are more likely to innovate, export, and offer training and are more likely to adopt international standards of quality, among other contributions. Their particularities are closely associated with productivity advantages and translate into improved outcomes not only for their owners but also for their workers and for smaller enterprises in their value chains. The challenge for economic development, however, is that production does not reach economic scale in low- and middle-income countries. Why are large firms scarcer in developing countries? Drawing on a rare set of data from public and private sources, as well as proprietary data from the International Finance Corporation and case studies, this book shows that large firms are often born large, or with the attributes of largeness. In other words, what is distinct about them is often in place from day one of their operations. To fill the ‘missing top’ of the firm-size distribution with additional large firms, governments should support the creation of such firms by opening markets to greater competition. In low-income countries, this objective can be achieved through simple policy reorientation, such as breaking oligopolies, removing unnecessary restrictions to international trade and investment, and establishing strong rules to prevent the abuse of market power. Governments should also strive to ensure that private actors have the skills, technology, intelligence, infrastructure, and finance they need to create large ventures. Additionally, they should actively work to spread the benefits from production at scale across the largest possible number of market participants. This book seeks to bring frontier thinking and evidence on the role and origins of large firms to a wide range of readers, including academics, development practitioners and policy makers.

Details

  • Author

    Ciani,Andrea, Hyland,Marie Caitriona, Karalashvili,Nona, Keller,Jennifer L., Ragoussis,Alexandros, Tran,Trang Thu

  • Document Date

    2020/09/17

  • Document Type

    Publication

  • Report Number

    153025

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    World,

  • Region

    The World Region,

  • Disclosure Date

    2020/09/17

  • Disclosure Status

    Disclosed

  • Doc Name

    Making It Big : Why Developing Countries Need More Large Firms

  • Keywords

    European Bank for Reconstruction and Development; economies of scale and scope; advantage of economies of scale; small and medium enterprise development; International Trade and Investment; protection property right; capacity-building activity; abuse of market power; total number of people; rate of productivity growth; efficient use of resource; minimum efficient scale; foreign direct investment; share of employment; development finance institution; state-owned enterprise; cost of production; role of development; labor productivity growth; competition in service; less developed economy; intellectual property rights; market to competition; net job creation; investment in plant; firm size distribution; quality of job; total tax revenue; global supply chain; number of jobs; conflicts of interest; economies of scope; capital per worker; total factor productivity; access to goods; country income group; availability of finance; high fixed cost; access to technology; privileges and immunity; segments of society; loss of capital; universal service provision; world war ii; Learning and Innovation Credit; value added; wage premium; regulatory protection; industrial census; business environment; Market Intelligence; large incumbent; business census; value chain; high wage; remote location; middle-income economy; largest firms; smaller enterprise; labor survey; employment share; agricultural sector; creating job; outward orientation; new entrant; international standard; total employment; retail industry; minimum scale; human capital; Innovation Policies; innovation policy; telecommunications infrastructure; workforce skill; court system; customs operation; business forum; job loss; market access; new venture; low share; large enterprise; hourly wage; virtuous cycle; foreign investor; private actor; foreign ownership; market participant; statutory monopoly; preferential access; Natural Resources; government contract; foreign competitor; new market; copyright owner; market regulation; trade process; production process; sole responsibility; original work; open market; Labor Market; technological change; global economy; disorderly exit; inclusive growth; government support; competitive sector; liquidity support; contestable market; macroeconomic data; public good; commercial term; Job Quality; managerial capability; research assistance; social progress; cross-country information; macroeconomic outcome; important share; aggregate net; capital gain; lower-income market; existing asset; private source; commercial objectives; lower-income economy; private investment; unnecessary restriction; competition framework; optimal scale; first year; productivity distribution; domestic entrepreneur; industrial market; legal entities; legal entity; average cost; lower costs; firm growth; decreasing return; empirical association; communications industry; accounting service; state intervention; cost efficiency; firm productivity; cross-country variation; industrial revolution; employment growth; sector activity; informal sector; Public-Private Partnership; commercial purpose; driving force; financial interest; telecommunications industry; business service; personal care; client needs; competition benefit; investment advice; wage employment; important policy; social objective; healthy markets; academic interest; small economy; income generation; aggregate outcome; managerial ability; sectoral composition; information availability; production cost; Public Goods; secure employment; chemical industry; manufacturing sector; market diversification; labor right; national employment; global integration; multinational companies; multinational company; secure id; Labor Law; trade rule; government regulation; state ownership; skill mix; education level; managerial practice; firm-level employment; age distribution; organizational capital; client company; Product Diversification; capital stock; finance strategy; smaller one

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Citation

Ciani,Andrea Hyland,Marie Caitriona Karalashvili,Nona Keller,Jennifer L. Ragoussis,Alexandros Tran,Trang Thu

Making It Big : Why Developing Countries Need More Large Firms (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/296031600316287832/Making-It-Big-Why-Developing-Countries-Need-More-Large-Firms