Entry, exit and productivity growth: Spanish manufacturing during the eighties

Abstract

This paper analyses the role played by both competitive pressure (increasing imports) and the restructuring of industries through entry and exit in productivity growth of Spanish manufacturing during the eighties, the key period of its accession to the EEC economy. A GMM panel estimation of the determinants of corrected Solow residual for 75 manufacturing during 1979–1990, shows that these forces accounted for 80% of productivity growth, playing an important role the displacement of inefficient firms by competitive entry.