The International Monetary Fund (IMF) have today published research which shows that large companies have increased their dominance over the world’s advanced economies over the course of the Covid-19 pandemic.
A study by the Washington-based institution found that the crisis has simultaneously hit small and medium enterprises especially hard.
The IMF found that big companies had increased their concentration of revenues over the revenue. Kristalina Georgieva, managing director of the IMF, told The Times:
“Due to the pandemic, we estimate that this concentration could now increase in advanced economies by at least as much as it did in the 15 years to end of 2015. Even in those industries that benefited from the crisis, such as the digital sector, dominant players are among the biggest winners.”
According to the IMF, the dominance of large firms is growing most rapidly in the technology sector. The report reveals that over the past 20 years, price mark-ups, a measure that looks at how much firms can price their goods above marginal cost, has risen in the technology sector at double the rate observed in the wider economy.
The IMF continued, “We know from experience and IMF research that excessive market power in the hands of a few firms can be a drag on medium-term growth, stifling innovation and holding back investment. Such an outcome could undermine the recovery from the Covid-19 crisis, and it would block the rise of many emerging firms at a time when their dynamism is desperately needed.”