The performance of politically connected firms in South East Europe: state capture or business capture?

Figures & data

Table 1. Descriptive statistics for main variables for selected SEE countries.

	Mean	Standard deviation	Minimum	Maximum	N
Employment size (year t)	91.98	301.51	1	11,382	3,403
Employment size (year t-3)	86.74	314.08	0	10,889	3,126
Age of firm (years)	21.83	15.50	3	206	3,453
Employment growth (3 years)	0.1506	1.428	−0.937	50.000	3,123
Politically connected (yes=1 no=0)	0.045	0.208	0	1	3,455
Sector (manufacturing=1 services=0)	0.434	0.496	0	1	3,466

Source: BEEPS VI survey.

Table 2. Characteristics of politically connected firms by country, age, size and growth.

		Mean age (years)			Mean size (permanent full-time employees)			Annual employment growth
Country	N	unconnected	connected	all	unconnected	connected	all	unconnected	connected	all
Albania	377	15.7	20.6	16.0	70.1	110.6	72.0	6.5%	10.3%	6.7%
Bosnia & Herzegovina	362	22.3	27.5	22.7	97.1	77.9	95.4	9.4%	1.6%	8.6%
Bulgaria	772	19.1	18.3	19.1	77.4	329.3	83.6	1.6%	2.3%	1.6%
Croatia	404	26.2	25.8	26.2	108.6	88.8	107.9	5.7%	1.1%	5.5%
Kosovo	271	18.4	23.3	18.6	35.8	52.8	36.7	3.9%	0.4%	3.7%
Montenegro	150	21.6	29.8	22.4	66.7	98.3	70.1	2.6%	3.1%	2.7%
North Macedonia	360	22.1	33.8	22.4	85.7	193.4	88.7	9.2%	−2.3%	8.9%
Serbia	361	23.3	23.7	23.4	119.9	515.7	140.0	3.8%	−2.6%	3.5%
Slovenia	409	27.4	27.1	27.4	102.4	57.5	100.7	5.5%	4.5%	5.4%
Total	3466	21.7	25.2	21.8	87.5	170.6	91.3	5.2%	2.2%	5.0%

Source: BEEPS VI survey.

Table 3. Determinants of employment growth (dependent variable).

	1	2	3	4	5
lnsize	0.044***	0.138***	0.144***	0.141***	0.137***
[lnsize]^2		−0.013***	−0.013***	−0.013***	−0.012***
lnage	−0.094***	−0.229***	−0.244***	−0.230***	−0.233***
[lnage]^2		0.023**	0.0265**	0.023**	0.024**
connected (0,1)	−0.051*	−0.045*	−0.067*	−0.068*	0.079
manufacturing (0,1)			−0.046***	−0.040***	−0.040***
manufacturing*connected			0.048	0.040	0.028
constant	0.195***	0.234**	0.258***	0.267***	0.272***
country dummies	No	No	No	Yes	Yes
country*connected	No	No	No	No	Yes
F	33.68***	33.68***	16.72***	18.37***	12.53***
Adjusted R-squared	0.056	0.056	0.071	0.077	0.079
Breusch-Pagan χ2	6.39**	6.39**	3.47*	2.00	0.83
Robust standard errors	Yes	Yes	Yes	No	No
Average marginal effects
dy/dx (lnsize)	n/a	0.051***	0.053***	0.054***	0.053***
dy/dx (lnage)	n/a	−0.091***	−0.088***	−0.094***	−0.094***
Contrasts of predictive margins
1. connected (yes vs. base)	−0.051*	−0.045*	−0.043*	−0.048*	−0.054**
2. connected (services)	n/a	n/a	−0.067*	−0.068**	−0.068*
3. connected (manufacturing)	n/a	n/a	−0.019	−0.028	−0.040

Source: BEEPS VI. Note: dependent variable ln(employment growth rate + 1). The Breusch-Pagan χ2 is a test for heteroscedasticity. Estimation is made using OLS in STATA. In cols. 4 & 5 robust standard errors are presented. Note: Equations differ by form of interaction as follows (1) no interaction (2) lnsize and lnage squared (3) sector*connected (4) sector*connected with country dummies (5) sector*connected with country*connected and country dummies.

Figure 1. Predicted employment growth by firm size and age .

Source: Table 1, column 2

Figure 2. Predicted employment growth of connected firms with 95% confidence intervals.

Source: BEEPS VI survey, author’s calculations, Note: AL=Albania, RS=Serbia, BA= Bosnia and Herzegovina, MK=North Macedonia, XK=Kosovo, SI=Slovenia, BG=Bulgaria, HR=Croatia, ME= Montenegro