TY  - JOUR
AU  - Hsieh, Chang-Tai
AU  - Klenow, Peter J
TI  - The Life Cycle of Plants in India and Mexico
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18133
PY  - 2012
Y2  - June 2012
DO  - 10.3386/w18133
UR  - http://www.nber.org/papers/w18133
L1  - http://www.nber.org/papers/w18133.pdf
N1  - Author contact info:
Chang-Tai Hsieh
Booth School of Business
University of Chicago
5807 S Woodlawn Ave
Chicago, IL 60637
Tel: 773/8340590
Fax: 484-589-3583
E-Mail: chsieh@chicagoBooth.edu

Peter J. Klenow
Department of Economics
579 Jane Stanford Way
Stanford University
Stanford, CA  94305-6072
Tel: 650/725-8169
Fax: NA
E-Mail: Klenow@Stanford.edu
M2  - featured in NBER digest on 2012-09-20
AB  - In the U.S., the average 40 year old plant employs almost eight times as many workers as the typical plant five years or younger.  In contrast, surviving Indian plants exhibit little growth in terms of either employment or output.  Mexico is intermediate to India and the U.S. in these respects: the average 40 year old Mexican plant employs twice as many workers as an average new plant.  This pattern holds across many industries and for formal and informal establishments alike.  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 GE models, we find that the difference in life cycle dynamics could lower aggregate manufacturing productivity on the order of 25% in India and Mexico relative to the U.S.
ER  -