Evaluation of the Level of Competition in Ukraine in Industrial Production Industries
The aim of this work is to study market competition on the example of Ukrainian companies in all manufacturing industries for the period 2008-17 and to compare the results with the similar indicators for the Russian Federation. The study is based on microdata for more than twenty thousand Ukrainian companies. The main analysis tools are aggregate labor productivity decomposition and econometric assessment of the relationship between the productivity of companies and their revenue growth. The first method makes it possible to single out the share of productivity growth provided by the redistribution of market shares in favor of the more productive firms (which represents competitive process), and the share provided by the firms’ own growth of productivity. The second method allows us to analyze how the static and dynamic components of productivity affect the revenue growth of firms. The analysis of the literature indicates a weak role of competitive selection both in developed countries (USA, EU countries) and in developing countries (Russia and its regions). The results of the analysis indicate a limited role of competition in the growth of industrial labor productivity in Ukraine, as well as an insignificant role of companies’ own productivity in determining the growth of their sales. Moreover, such results are obtained both for decomposition and for econometric analysis and are robust to different ways of measuring productivity. Comparing the results with the estimates obtained earlier for Russia, we conclude that the role of competition is significantly lower for the Ukrainian manufacturing industries and firms in these industries. The results can be useful when working out recommendations for improving industrial policy, as well as in analyzing the market position of firms.