Research Insights: Is Business Dynamism Declining?

Recent research shows a global decline in business dynamism, characterized by lower firm entry rates and slower job reallocation, particularly in advanced economies. The global decline in business dynamism is widespread across sectors, including the sectors that have been relatively more dynamic such as those intensive in information and communication technology. Demographic trends, such as the slowdown in working-age population growth, have the potential to explain the slowdown in business dynamism, as entry rates are closely linked to population growth rates. However, variation in population growth rates appears to account for only part of the decline in business dynamism.