Mikhail Pomazanov – National Research University Higher School of Economics, st. Myasnitskaya 20, 101000 Moscow, Russia
Nadezhda Loginova – National Research University Higher School of Economics, st. Myasnitskaya 20, 101000 Moscow, Russia
Keywords: Concentration;
Herfindahl–Hirschman index;
Sustainable development;
Corporation;
National scale
Abstract: The high concentration of assets and revenues of corporations or large enterprises on a national scale represents a risk that can hinder sustainable development. For instance, in terms of a bank’s loan portfolio concentration risk is so crucial that it is a separate significant type of risk in addition to credit risk. In the proposed article a corporate sector concentration index was constructed for countries for which revenue data of TOP-50 or TOP-100 largest enterprises is accessible from open sources. The index is based on the revealed pattern of decrease in the volume indicator of the company (revenue, assets) of the order of 1⁄n^z, where n is the serial number of the companies ranked in descending order of the indicator, and z is a country-specific parameter. Based on all possibly available open statistics, providing data on 30 countries, the consistency of the statistical hypothesis about the dependence of the corporate sector concentration index on the Human Development Index and Ease of doing business is substantiated.
9th International Scientific ERAZ Conference – ERAZ 2023 – Selected Papers: KNOWLEDGE BASED SUSTAINABLE DEVELOPMENT, hybrid – online, virtually and in person, Prague, Czech Republic, June 1, 2023
ERAZ Selected Papers published by: Association of Economists and Managers of the Balkans – Belgrade, Serbia
ERAZ conference partners: Faculty of Logistics, University of Maribor, Maribor (Slovenia); University of National and World Economy – UNWE, Sofia (Bulgaria); Center for Political Research and Documentation (KEPET), Research Laboratory of the Department of Political Science of University of Crete (Greece); Institute of Public Finance – Zagreb (Croatia); Faculty of Tourism and Hospitality Ohrid, University of St. Kliment Ohridski from Bitola (North Macedonia)
ERAZ Conference 2023 Selected Papers: ISBN 978-86-80194-73-8, ISSN 2683-5568, DOI: https://doi.org/10.31410/ERAZ.S.P.2023
Creative Commons Non Commercial CC BY-NC: This article is distributed under the terms of the Creative Commons Attribution-Non-Commercial 4.0 License (https://creativecommons.org/licenses/by-nc/4.0/) which permits non-commercial use, reproduction and distribution of the work without further permission.
Suggested citation
Pomazanov, M., & Loginova, N. (2023). Macroeconomic Concentration Index of Corporate Sector Companies. In V. Bevanda (Ed.), ERAZ Conference – Knowlegde Based Sustainable Development: Vol 9. Selected Papers (pp. 51-62). Association of Economists and Managers of the Balkans. https://doi.org/10.31410/ERAZ.S.P.2023.51
References
Akhundjanov, S. B., & Chamberlain, L. (2019). The power-law distribution of agricultural land size. Journal of Applied Statistics, 46(16), 3044-3056. https://doi.org/10.1080/02664763.2019.1624695
Axtell, R. L. (2001). Zipf Distribution of U.S. Firm Sizes. Science, 293(5536), 1818-1820. https://doi.org/10.1126/science.1062081
Balthrop, A. (2016). Power laws in oil and natural gas production. Empirical Economics, 51(4), 1521-1539. https://doi.org/10.1007/s00181-015-1054-4
Benhabib, J., Bisin, A., & Zhu, S. (2011). The distribution of wealth and fiscal policy in economies with finitely lived agents. Econometrica, 79(1), 123–157. https://doi.org/10.3982/ECTA8416
Berliant, M., & Watanabe, H. (2015). Explaining the size distribution of cities: Extreme economies. Quantitative Economics, 6(1), 153-187. https://doi.org/10.3982/qe42
Candelpergher, B., & Coppo, M.-A. (2020). Laurent expansion of harmonic zeta functions. Journal of Mathematical Analysis and Applications, 491(1), 124309. https://doi.org/10.1016/j.jmaa.2020.124309
Champernowne, D. G. (1953). A Model of Income Distribution. The Economic Journal, 63(250), 318. https://doi.org/10.2307/2227127
Clauset, A., Shalizi, C. R., & Newman, M. E. J. (2009). Power-Law Distributions in Empirical Data. SIAM Review, 51(4), 661-703. https://doi.org/10.1137/070710111
Deng, W., & Wang, J. (2023). The Euler-Riemann ζ function and the estimation of the power-law exponent. Physica A: Statistical Mechanics and its Applications, 624, 128940. https://doi.org/10.1016/j.physa.2023.128940
Devadoss, S., Luckstead, J., Danforth, D., & Akhundjanov, S. (2016). The power law distribution for lower tail cities in India. Physica A: Statistical Mechanics and its Applications, 442, 193- 196. https://doi.org/10.1016/j.physa.2015.09.016
EPI. (2022). Results Overview. https://epi.yale.edu/epi-results/2022/component/epi
Gabaix, X. (1999). Zipf’s Law for Cities: An Explanation. The Quarterly Journal of Economics, 114(3), 739-767. https://doi.org/10.1162/003355399556133
Gini, C. (1921). Measurement of Inequality of Incomes. The Economic Journal, 31(121), 124. https://doi.org/10.2307/2223319
Gordy, M. B., & Luetkebohmert, E. (2007). Granularity Adjustment for Basel II. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.2793986
HDI. (2022). HUMAN DEVELOPMENT INSIGHTS. Retrieved from https://hdr.undp.org/data-center/country-insights#/ranks
Herfindahl, O. C. (1950). Concentration in the steel industry [Doctoral dissertation, Columbia University].
Ioannides, Y. M., & Overman, H. G. (2003). Zipf’s law for cities: an empirical examination. Regional Science and Urban Economics, 33(2), 127-137. https://doi.org/10.1016/s0166-0462(02)00006-6
Klass, O. S., Biham, O., Levy, M., Malcai, O., & Solomon, S. (2006). The Forbes 400 and the Pareto wealth distribution. Economics Letters, 90(2), 290-295. https://doi.org/10.1016/j.econlet.2005.08.020
Knack, S., & Keefer, P. (1995). Institutions and Economic Performance: Cross-Country Tests using Alternative Institutional Measures. Economics & Politics, 7(3), 207-227. https://doi.org/10.1111/j.1468-0343.1995.tb00111.x
Krugman, P. (1996). The self-organizing economy. Choice Reviews Online, 33(09), 33-5214-33- 5214. https://doi.org/10.5860/choice.33-5214
Luttmer, E. G. J. (2007). Selection, Growth, and the Size Distribution of Firms. The Quarterly Journal of Economics, 122(3), 1103-1144. https://doi.org/10.1162/qjec.122.3.1103
Mauro, P. (1995). Corruption and Growth. The Quarterly Journal of Economics, 110(3), 681-712. https://doi.org/10.2307/2946696
Nickell, S., Nunziata, L., & Ochel, W. (2005). Unemployment in the OECD Since the 1960s. What Do We Know? The Economic Journal, 115(500), 1-27. https://doi.org/10.1111/j.1468-0297.2004.00958.x
Pareto, V. (1896). Cours d’Economie Politique Professe a l’Universite de Lausanne, vol. I. Paris: F. Rouge.
RAEX-RR. (1995). Rating of the largest companies in Russia by product sales volume. Retrieved from https://raex-rr.com/largest/RAEX-600/biggest_companies/1995/
RAEX-RR. (2021). Rating of the largest companies in Russia RAEX-600. Retrieved from https://raex-rr.com/largest/RAEX-600/biggest_companies/2021/
Singh, S. K., & Maddala, G. S. (1976). A Function for Size Distribution of Incomes. Econometrica, 44(5), 963. https://doi.org/10.2307/1911538
Stanley, M. H. R., Buldyrev, S. V., Havlin, S., Mantegna, R. N., Salinger, M. A., & Eugene Stanley, H. (1995). Zipf plots and the size distribution of firms. Economics Letters, 49(4), 453-457. https://doi.org/10.1016/0165-1765(95)00696-d
Statement of Policy. (2021). Statement of Policy The PRA’s methodologies for setting Pillar 2 capital. https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/statement-of-policy/2021/the-pras-methodologies-for-setting-pillar-2a-capital-jan-2022.pdf
Statista. (2023). https://www.statista.com. For example, for Egypt https://www.statista.com/study/89929/top-100-companies-egypt/
Titchmarsh, E. C. (1986). The Theory of the Riemann Zeta-Function. 2nd Edition, Edited and with a Preface by Heath-Brown, D. R., The Clarendon Press, Oxford University Press, Oxford.
Toda, A. A. (2012). The double power law in income distribution: Explanations and evidence. Journal of Economic Behavior & Organization, 84(1), 364-381. https://doi.org/10.1016/j.jebo.2012.04.012
Toda, A. A. (2017). A note on the size distribution of consumption: more double Pareto than lognormal. Macroeconomic Dynamics, 21(6), 1508–1518. http://dx.doi.org/10.2139/ssrn.2540741
Toda, A. A., & Walsh, K. (2015). The Double Power Law in Consumption and Implications for Testing Euler Equations. Journal of Political Economy, 123(5), 1177-1200. https://doi.org/10.1086/682729
Wold, H. O. A., & Whittle, P. (1957). A Model Explaining the Pareto Distribution of Wealth. Econometrica, 25(4), 591. https://doi.org/10.2307/1905385
World Bank Database. (2021). https://data.worldbank.org/indicator