Brazilian Enterprise Birth and Death Rates by economic activity from 1997 to 2001 Maria Luiza Zacharias - IBGE, Brazil 17th Round Table on Business Survey Frames Rome, 26-31 Oct, 2003

Business Demography The study of Business Demography uses the Central Business Register (CEMPRE), maintained by the Brazilian Statistical and Geographical Institute – IBGE, as its main source. The study of Business Demography uses the Central Business Register (CEMPRE), maintained by the Brazilian Statistical and Geographical Institute – IBGE, as its main source.

Business Demography In this study, we present enterprise birth and death rates from 1997 to 2001 by economic activity sector (Manufacturing, Trade and Services) and employment size. In this study, we present enterprise birth and death rates from 1997 to 2001 by economic activity sector (Manufacturing, Trade and Services) and employment size.

7,5 million of enterprises 8,3 million of local units CEMPRE IN FIGURES 7,5 million of enterprises 8,3 million of local units 4,7 million of active enterprises Some figures about the age of the active enterprises in 2001 are also presented. Currently CEMPRE has about 7,5 million records of enterprises and 8,3 million local units. In 2001, the number of active enterprises was 4,7 million.

Selected industries Manufacturing (C - Mining and Quarrying and D – Manufacturing); Trade (G – Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods); Services (H – Hotels and restaurants, I – Transport, storage and communications, K – Real estate, renting and business activities); according to ISIC. The study considered enterprises which main activity code was included in one of the following economic activity sectors: Manufacturing (C - Mining and Quarrying and D – Manufacturing), Trade (G – Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods) and Services (H – Hotels and restaurants, I – Transport, storage and communications, K – Real estate, renting and business activities), according to ISIC.

Methodological procedures Birth of enterprises - the existence of its identification number in the Business Register that was not found in the preceding year; Death of enterprises - the absence of this identification number which was found in the previous year. (The study has not considered mergers and acquisitions as separate demographic events, what may affect the calculation of rates) The birth and death rates were calculated dividing the number of births and deaths in each year by the population of enterprises of the previous year, for each economic activity sector. A birth of an enterprise, in a given year, is defined by the existence of its identification number in the Business Register that was not found in the preceding year, while a death is the absence of this identification number that was found in the previous one.

In the period 1997/2001 the average number of enterprises created and closed per year was 609 and 375 thousand, respectively, resulting in a positive net balance of 234 thousand ones. The Trade sector is responsible for the largest number of new and dead enterprises. From 1997 to 2000, about 300 to 373 thousand new enterprises arose yearly in this sector; in 2001 this amount had an expressive increase, with more than 454 thousand new enterprises being created.

The average number of births in the Service sector was 175 thousand enterprises and 99 thousand of deaths; in the Manufacturing sector, this average was 65 thousand and 44 thousand.

We can see that the highest average birth rate is located in the Service Sector (23,7%), and the lowest one is in the Manufacturing Sector (16,7%) . In spite of the small percentage difference, the pattern for the average death rates is the same presented for the birth rates: the Service sector presents average death rate of 13,9%, the Trade, 12,8% and the Manufacturing, 11,3%. Moreover, the net balance of the total number of enterprises is always positive, showing that there is always a larger number of births than deaths. In the Service sector, the birth rate is 1,71 times the death rate; in the Trade sector, this ratio is 1,56 and in the Manufacturing, 1,48.

Considering the size of the companies, in terms of the number of employees, the highest birth and death rates are located both in the lower class, with 4 employees or less, regardless of the economic activity. In Manufacturing, the average birth rate in the lower class is 21,5%, while in the upper class, with 500 employees and more, it decreases to 1,8%. As for the death rate, the behavior is the same, 14,6%, is the average in the class with 4 employees and less, and 2,8% in the class of 500 and more, showing that the larger the company, the smaller are the birth and death rates.

Average Birth and Death Rates by class of employees Manufacturing Trade The pattern is the same regardless of the activity. The birth rates are always greater than the death ones, except for the large enterprises (100 or +). The charts show the rates by enterprise activity and size. The pattern is the same regardless of the activity. The birth rates are always greater than the death ones, except for the large enterprises (100 or +). In the upper two classes, with 100 employees or more, the average death rates are higher than the average birth rates, in all economic activities. It can be partly explained by events of mergers and acquisitions, that generally happen in large enterprises, and which may appear, in our study, as (false) “births” and “deaths”. Service

Enterprise Age Distribution Now we´ll see some figures concerning the distribution of the age of the enterprises in CEMPRE in relation to the size of the company.

Table 3 shows that the enterprise age distribution vary according to the company size. The proportion of enterprises with less than 5 years of existence increases as the size decreases. In the size class with up to 4 employees, almost half of the enterprises were up to 5 years old, while in the class with 100 employees or more, this ratio was 16%. It shows that large enterprises are more stable, since 84% of them are 5 or more years old.

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