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Patterns of business creation, survival and growth: Evidence from Africa

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  • Klapper, Leora
  • Richmond, Christine

Abstract

We study firm dynamics using a novel database of all formally registered firms in Cote d'Ivoire from 1977 to 1997, which account for about 60% of GDP. First, we examine entry and exit patterns and the role of new and exiting firms versus incumbents in job creation and destruction. We find that while the rate of job creation at new firms is quiet high – at 8% on average – the numbers of jobs added by new firms is small in absolute terms. Next, we examine survival rates and find that the probability of survival increases monotonically with firm size, but that manufacturing and foreign-owned firms face higher likelihoods of exit compared to service oriented and domestically-owned firms. We find that higher GDP growth increases the probability of firm survival, but this is a broad impact with no firm size disproportionately affected. In robustness checks we find that post-1987, size is no longer a significant determinant of firm survival for new entrants, suggesting that the operating environment for firms changed. Finally, we find that trade and fiscal reform episodes raised the probability of firm exit and attenuated the survival disadvantages faced by smaller firms, but exchange rate revaluation and pro-private sector reforms did not significantly lower the likelihood of exit.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): S1 ()
Pages: S32-S44

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Handle: RePEc:eee:labeco:v:18:y:2011:i:s1:p:s32-s44

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Web page: http://www.elsevier.com/locate/labeco

Related research

Keywords: Business incorporation; Net employment; Regulatory barriers; Economic growth;

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References

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Cited by:
  1. repec:ldr:wpaper:92 is not listed on IDEAS
  2. Nasr, Sahar & Rostom, Ahmed, 2013. "SME contributions to employment, job creation, and growth in the Arab world," Policy Research Working Paper Series 6682, The World Bank.
  3. Andrew Kerr & Martin Wittenberg & Jairo Arrow, 2013. "Job Creation and Destruction in South Africa," SALDRU Working Papers 092, Southern Africa Labour and Development Research Unit, University of Cape Town.

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