Competition and Firm Recovery Post-COVID-19
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World Bank, Washington, DC
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This paper examines the impact of the
COVID-19 crisis on the reallocation of economic activity
across firms, and whether this reallocation depends on the
competition environment. The paper uses the World Bank’s
Enterprise Surveys COVID-19 Follow-up Surveys for about
8,000 firms in 23 emerging and developing countries in
Europe and Central Asia, matched with 2019 Enterprise
Surveys data. It finds that during the COVID-19 crisis,
economic activity was reallocated toward firms with higher
pre-crisis labor productivity. Countries with a strong
competition environment experienced more reallocation from
less productive to more productive firms than countries with
a weak competition environment. The evidence also suggests
that reallocation from low- to high-productivity firms
during the COVID-19 crisis was stronger compared with
pre-crisis times. Finally, the analysis shows that
government support measures implemented in response to the
crisis may have adverse effects on competition and
productivity growth since support went to less productive
and larger firms, regardless of their pre-crisis innovation.
Palabras clave
CORONAVIRUS, COVID-19, PANDEMIC RESPONSE, GOVERNMENT SUPPORT, PRODUCTIVITY, FIRM COMPETITION, CREATIVE DESTRUCTION, ECONOMIC RECOVERY, ENTERPRISE SURVEY