FIRM SIZE DISTRIBUTION: EVIDENCE FROM FIRM LEVEL CROATIAN DATA

Firm size distribution has been an intensely studied subject in economics for atleast a century. This should not be surprising considering the fact that in economic literature it is connected with a host of economic indicators, including: competitiveness, innovation and growth cycles of firms and industries. The goal of this paper is to determine the size distribution of Croatian firms, in order to obtain evidence of change in business structure across time. This evidence then enables an analysis of the difference in business dynamics trends between Croatian and developed EU countries, which in turn has significant policy implications. The main analytical tools used in the analysis are Kolmogorov-Smirnov and Anderson-Darling statistical tests which were used to determine a "best fit" distribution. The results indicate that the most appropriate distributions are of the Burr, Dagum, Pareto and Lognormal forms. The data is obtained from FINA (Croatian financial agency), while the analysis was conducted using the R programming language and EasyFit software. The main contribution of the paper is the fact that as far as the author is aware, it represents the first attempt to analyze firm size distribution in Croatia, which makes it a necessary first step in the quest for a more thorough and comprehensive microeconomics based understanding of the structure of the Croatia economy.