Corporate growth and size across Portuguese regions
Natália Barbosa; Vasco Eiriz

This paper analyses the patterns of corporate growth of manufacturing firms across Portuguese regions. In particular, we compare corporate size and growth rates in order to investigate (i) whether regional differences in terms of mix of economic activities, interpreted as generating localization economies, exert any influence on corporate growth and size and (ii) whether there is evidence of persistence in corporate growth across regions. Using an extensive dataset of Portuguese manufacturing firms and applying parametric and semi-parametric approaches, we found that corporate size, measured by total assets, follows approximately a log-normal distribution in seven of the eighteen analyzed regions. This result suggests that in those seven regions, corporate growth rates are unrelated to corporate size and therefore firms have equal probabilities of attaining a particular growth rate within any given period. However, by estimating corporate growth as a function of lagged values of corporate size we uncovered that Portuguese manufacturing firms experience serial correlation in their growth patterns in all regions. This offers evidence on the persistence of corporate growth at regional level, indicating that corporate growth depends on firm’s previous success.
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