NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Big Business Stability and Economic Growth: Is What's Good for General Motors Good for America?

Kathy Fogel, Randall Morck, Bernard Yeung

NBER Working Paper No. 12394
Issued in July 2006
NBER Program(s):   CF   EFG

What is good for big business need not generally advance a country’s overall economy. Big business turnover correlates with rising income, productivity, and (in high income countries) faster capital accumulation; consistent with Schumpeter’s (1912) creative destruction and recent formalizations like Aghion and Howitt (1992). Turnover appears to “cause” growth; and disappearing behemoths, more than rising stars, drive our results. Stronger findings suggest more intense creative destruction in countries with higher incomes, as well as those with smaller governments, Common Law courts, smaller banking systems, stronger shareholder rights, and more open economies. Only the last matters more in lower income countries.

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Document Object Identifier (DOI): 10.3386/w12394

Published: Fogel, Kathy & Morck, Randall & Yeung, Bernard, 2008. "Big business stability and economic growth: Is what's good for General Motors good for America?," Journal of Financial Economics, Elsevier, vol. 89(1), pages 83-108, July.

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