Atlantic drift: venture capital performance in the UK and the US

This report sheds further light on the magnitude of the performance gap between US and UK venture capital funds, its evolution over time, and what the likely drivers of the performance differences are. It uses a novel database that combines data on VC fund performance and their investments in the US and UK for 791 funds raised between 1990- 2005

Firm dynamics and job creation in the United Kingdom:1998–2013

This article is motivated by a very simple question – ‘what types of firms create the most jobs in the UK economy?’ One popular answer to this question has been High-Growth Firms (HGFs). These firms represent only a small minority – the ‘Vital 6%’ – of the UK business population yet, but have a disproportionate impact on job creation and innovation. We re-visit the discussion launched by the 2009 National Endowment for Science, Technology and the Arts (NESTA) reports, which identified the 6% figure and, using more recent data, confirm the headline conclusion for job creation: a small number of job-creating firms (mostly small firms) are responsible for a significant amount of net job creation in the United Kingdom. Adopting our alternative preferred analytical approach, which involves tracking the growth performance of cohorts of start-ups confirms this conclusion; however, we find an even smaller number of job-creating firms are responsible for a very significant proportion of job creation. We conclude by considering the question – ‘what are the implications for policy choices?’

Remaking Europe: the new manufacturing as an engine for growth. Bruegel Blueprint Series 26 September 2017

Europe needs to know how it can realise the potential for industrial rejuvenation. How well are European firms responding to the new opportunities for growth, and in which global value chains are they developing these new activities? The policy discussion on the future of manufacturing requires an understanding of the changing role of manufacturing in Europe’s growth agenda

TFP estimation at firm level: The fiscal aspect of productivity convergence in the UK

This paper reviews the state of the art in firm-level Total Factor Productivity (TFP) estimation employing an unbalanced panel of 7400 manufacturing firms in the UK during 2004–2011. The five methodologies considered are Superlative Index Numbers, System-GMM, Olley and Pakes (1996), Levisohn and Petrin (2003) and Ackerberg et al. (2015). Each of these estimators assumes different underlying properties for some inputs, which potentially affect the TFP measurements. We analyze the role of corporate taxation within a TFP catch-up model, providing new insights on the unexplored fiscal aspect of the UK productivity puzzle. Our findings are summarized as: (i) the Ackerberg et al. (2015) algorithm is the cutting-edge estimation technique with most plausible results, while GMM system (GMM-SYS) is the second best estimator; (ii) the global financial crisis in 2009 impacted negatively on TFP; (iii) corporate tax adversely affects TFP growth as it induces distortive effects on productivity enhancing investment; (iv) the adverse effect is found to be severe in the groups of R&D and exporting firms, suggesting that the distortive nature of corporate tax affects disproportionately the firms that are more financially constrained and more exposed to risk

European Competitiveness: A Semi-Parametric Stochastic Metafrontier Analysis at the Firm Level

In this paper a semiparametric stochastic metafrontier approach is used to obtain insight into firm-level competitiveness in Europe. We divert from standard TFP studies at the firm level as we simultaneously allow for inefficiency, noise and do not impose a functional form on the input-output relation. Using AMADEUS firm-level data covering 10 manufacturing sectors from seven EU15 countries, (i) we document substantial, persistent divergences in competitiveness (with Belgium and Germany as benchmark countries and Spain lagging behind) and a wide technology gap, (ii) we confirm the absence of convergence in TFP between the seven selected countries, (iii) we confirm that the technology gap is more pronounced for smaller firms, (iv) we highlight the role of post-entry growth for competitiveness