The granular nature of emerging market economies: The case of Kazakhstan
Konings J. Sagyndykova G. Subramanian V. Volckaert A.
April 2023John Wiley and Sons Inc
Economics of Transition and Institutional Change
2023#31Issue 2429 - 464 pp.
This paper analyzes the granularity hypothesis in a large emerging economy, Kazakhstan. We use a new longitudinal dataset at the firm level and at quarterly frequency between 2012 and 2018 to document the size distribution of firms and to provide evidence that it follows a power law. We find that the largest 30 firms explain nearly 80 percent of the growth in aggregate total factor productivity. This confirms earlier research for the U.S. and other developed countries. However, the granular nature of the Kazakh economy is even more outspoken than in other countries. Thus idiosyncratic shocks and the way they ripple through the production network matter to understand changes in aggregate productivity growth. Moreover, since these granular firms are concentrated in the oil industry it exposes the vulnerability of the economy more to unexpected shocks in one industry in particular.
aggregate fluctuations , firm heterogeneity , granularity , total factor productivity , transitional economies
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Nazarbayev University Graduate School of Business, Nur-Sultan, Kazakhstan
Department of Economics, School of Sciences and Humanities, Nazarbayev University, Nur-Sultan, Kazakhstan
VIVES, Faculty of Economics and Business, KU Leuven, Leuven, Belgium
Nazarbayev University Graduate School of Business
Department of Economics
VIVES
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