Table 4 provides sector details on sector switching firms, focusing on the 1,076 firms
that switch “OUT” of a particular sector.20 Each row illustrates the number of firms that
switch “OUT” of a particular sector and categorizes these firms across the columns by
the sector they switch “IN” to. For example, 10 firms leaving production within
“Fabricated metal products” (ISIC 28) change to “Repairing of other transport
equipment” (ISIC 35), whereas nine firms move in the opposite direction. The sectors
that experience the greatest proportion of outward switchers are “Assembling/repairing
of motor vehicles” (ISIC 34 - 12.7%), “Furniture” (ISIC 36 - 10.3%) and “Medical and
optical instruments” (ISIC 33 - 8.9%). These sectors are also the ones that sector
switchers most frequently switch into suggesting a positive correlation between the
number of firm switchers entering and exiting specific sectors. This is consistent with
much of the literature on firm dynamics which finds a positive correlation between exit
and entry rates at the sector level.21 Over 33 percent of the firms leaving a particular
sector switch to the tertiary/service sector. This is particularly so for “Food processing”
(ISIC 15), where 76.1 percent of exiting firms switch to the service sector. The table
also documents exit rates by sector. As a percentage of the total number of firms in the
sector, most firms exit “Non-metallic mineral products” (ISIC 26 - 9.4 percent) and
“Basic metals” (ISIC 27 - 8.9 percent).
[TABLE 4 ABOUT HERE]
Table 5 reports summary statistics for each of the sector specific variables considered in
the exit and sector switching specifications. Firstly, the variation in the SOE
concentration ratio (SR) across sectors is quite high, ranging from 76.2 percent in
“Publishing and printing” (ISIC 22) to 6.0 percent in manufacture of “Furniture” (ISIC
20 The observations used in the construction of Table 4 correspond to the total in Table 3 for sector
switching “OUT” with consistent information on firm age (establishment year). The 1,076 sector
switching observations occur among 949 firms. Some 829 firms switch sector only once, whereas 113 and
seven firms switch main production two and three times respectively. A similar table for firms in the “IN”
category has been excluded due to space considerations. Results are available on request. The same table
for the total of 1,431 switching “OUT” firms is presented in the Appendix (Table A). Entry rates by sector
are also included.
21 See for example Disney et al. (2003) who find a high level of correlation between entry and exit rates
within UK manufacturing industries and Roberts and Tybout (1996) who find similar evidence in a
developing country context.
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