THE LIFE CYCLE OF PLANTS IN INDIA AND MEXICO

In the United States, the average 40-year-old plant employs more than seven times as many workers as the typical plant 5 years or younger. In contrast, surviving plants in India and Mexico exhibit much slower growth, roughly doubling in size over the same age range. The divergence in plant dynamics...

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Bibliographic Details
Published inThe Quarterly journal of economics Vol. 129; no. 3; pp. 1035 - 1084
Main Authors Hsieh, Chang-Tai, Klenow, Peter J.
Format Journal Article
LanguageEnglish
Published Oxford Oxford University Press 01.08.2014
Subjects
Business conditions
Equilibrium
Factories
India
Industrial plants
International comparisons
Mexico
Productivity
Studies
United States
United States > US
Mexico
India
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Summary:In the United States, the average 40-year-old plant employs more than seven times as many workers as the typical plant 5 years or younger. In contrast, surviving plants in India and Mexico exhibit much slower growth, roughly doubling in size over the same age range. The divergence in plant dynamics suggests lower investments by Indian and Mexican plants in process efficiency, quality, and in accessing markets at home and abroad. In simple general equilibrium models, we find that the difference in life cycle dynamics could lower aggregate manufacturing productivity on the order of 25 percent in India and Mexico relative to the United States.
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ISSN:0033-5533
1531-4650
DOI:10.1093/qje/qju014