the term “deep restructuring” – introducing new products and process, finding new markets for their goods, supported by significant investment.
The BEEPS surveys start in 1999, after the end of the transformational recession and the period of large-scale defensive restructuring by firms. Most of the region has experienced an economic recovery during the period covered by the surveys. Actions by firms that would have earlier been described as part of the defensive restructuring process intrinsic to the transition process are better thought of as the lower tail of the distribution of firm-level growth. This section therefore focuses on deep restructuring activities.
The BEEPS surveys are rich in measures of restructuring and innovation activity. However, many of these measures are hard to use because of calibration problems. If 30% of the sample of firms in a country introduce a new product, is this high or low? By benchmarking against what is observed in market economies, we can answer this question. We are also interested in measuring the pace of restructuring activity in TEs over time. The scale of misallocation of capital at the start of transition was enormous, meaning that there were many profitable market niches, large and small, for firms to move into. As transition progressed and the scale of the initial misallocation moved further into the past, the size and number of these profit opportunities would have decreased. One hypothesis we will explore is whether the scale of restructuring activity in TEs has been declining and approaching the levels observed in DMEs. We will also use the BEEPS data to explore the determinants of restructuring activity. We are interested in particular in the relationship between certain features of the business environment – in particular, competition, finance and ownership – and restructuring activity.
The BEEPS measures of restructuring activity that we use are, for each firm, indicators of whether the firm:
developed successfully a major new product line/service in the 36 months prior to the survey;