Template-Type: ReDIF-Paper 1.0
Author-Name: Evguenia Bessonova
Author-Email: BessonovaEV@cbr.ru


Author-Workplace-Name: Bank of Russia, Russian Federation




Title: Firms' Efficiency, Exits and Government procurement contracts

Abstract: This study provides evidence that productivity growth trends in Russia 
are similar to those in other countries where technology leaders enjoy productivity growth 
with a gap increasing between them and other companies. The survival analysis suggests that 
the most efficient firms quit the market at a faster rate than firms in other efficiency groups 
in the Russian economy. Survival functions of the least efficient firm do not always differ 
significantly from those of other companies. Results based on public procurement data 
provide evidence that additional financing from government contracts helps both the most and 
the least efficient firms to survive and shelters them from competitive pressure. 
In the short run, the positive effect of winning government procurement contracts for leaders 
seems to be only observed in their home regions, providing indirect evidence that the public 
procurement system does not support all types of firms with growth potential but only those affiliated 
with local authorities. Intervention in the mechanism of market selection through the system of public 
procurement could have a strong negative effect on economic growth as it provides incentives for 
inefficient firms without growth potential to stay in the market longer.


Length: 24 pages
Creation-Date: 2019-10
Revision-Date:
Publication-Status:
File-URL: http://cbr.ru/Content/Document/File/87577/wp-49_e.pdf
File-Format: Application/pdf
File-Function:
Number:wps49
Classification-JEL: D24, H57, L52.
Keywords: TFP growth, efficiency, productivity gap, government procurement contracts, firms’ exits. 
Handle:RePEc:bkr:wpaper:wps49