Ownership and Competitive Dynamics (Report‪)‬

INTRODUCTION There is accumulating evidence that competitive dynamics in the form of entrepreneurial initiative, new firm formation, mergers and demergers, "churning," etc. strongly impact economic growth. For example, Foster, Haltiwanger, and Krizan (1998) estimate that competitive dynamics through reallocation of productive assets account for about 50 percent of aggregate productivity growth. Moreover, hampering the automatic restructuring of industries in developed countries has been shown to imply a penalty in terms of forgone growth (Audretsch, Carree, van Stel, and Thurik 2003). (1) While these "stylized facts" would come as no surprise to the classical economists, to Joseph Schumpeter or to Ludwig von Mises, mainstream economists have been surprisingly late with respect to linking such firm- and industry-level dynamics with economy-level growth. In fact, much of the existing evidence is due to business historians, non-mainstream economists, and entrepreneurship scholars (e.g., Chandler, 1990; Pelikan, 1993; Chandler and Hikino, 1996; Bresnahan and Malerba, 1999; Wennekers and Thurik, 1999; Ahn, 2001; Audretsch et al.; 2003).