Regional Productivity Growth and Plant-Level Dynamics
The mix of companies in the economy is always changing. The more-productive ones expand, and the less-productive ones are driven out of the market, freeing resources such as labor and capital for new ventures. This reallocation contributes more to aggregate productivity growth than the productivity gains achieved by individual businesses. The efficiency with which the process takes place is a key factor affecting rates of productivity growth in different regions and explaining why they differ.
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The mix of companies in the economy is always changing. The more-productive ones expand, and the less-productive ones are driven out of the market, freeing resources such as labor and capital for new ventures. This reallocation contributes more to aggregate productivity growth than the productivity gains achieved by individual businesses. The efficiency with which the process takes place is a key factor affecting rates of productivity growth in different regions and explaining why they differ.
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