How Important Are Companies in a Country's Economic Growth?: This is What 'The Economist' Says

TL;DR

Economic growth rates profoundly affect societal living standards, with a 7% annual growth rate leading to thirty times the economic size over two generations, compared to 1% growth which only doubles it.
Sustained economic growth translates into social improvements like increased life expectancy, reduced infant mortality, expanded education, and better living conditions.
While early development economics focused on national-level factors and later shifted to micro-level randomized experiments, current research emphasizes the intermediate level of firms.
In many developing countries, firms are predominantly very small, often with fewer than ten employees, contrasting with larger average firm sizes in developed nations like the US.
Productive firms in developing economies face difficulties in expansion, unlike in developed countries where older firms are significantly larger than younger ones.
Reasons for this lack of expansion include institutional and policy factors such as tax systems favoring small businesses, restrictive labor regulations, and limited access to credit.
Improving management practices, through training and consulting, can significantly boost firm productivity and overall economic performance.
Recent research integrates various approaches, including macro-economic models that incorporate structural changes, to understand sustained economic growth.

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