Firm Heterogeneity and Market Selection in Sub-Saharan Africa: Does It Spur Industrial Progress?
AbstractThis article investigates the processes of market selection and industry dynamics in a sub-Saharan Africa context. Using census-based longitudinal data, it examines the distribution of productivity within an industry to determine whether patterns of firm entry, exit, and survival are driven by underlying efficiency differences. It also estimates the contributions to industry-level productivity growth of producer turnover and the reallocation of resources from less efficient producers to more efficient ones. The article shows that markets in sub-Saharan Africa, as represented by Ethiopia, are at least as strong as those in other regions in selecting efficient firms. Tolerance of inefficient firms also declines with the degree of exposure to international competition. While reallocation of resources played a positive and significant role for industry-level productivity growth, it only managed to offset the declining trend in intrafirm productivity. The article concludes that although markets have played the expected disciplinary role, long-term industrial growth requires more than functional markets, particularly in addressing firm-level innovation.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Economic Development and Cultural Change.
Volume (Year): 55 (2007)
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Other versions of this item:
- Shiferaw, Admasu, 2007. "Firm Heterogeneity and Market Selection in Sub-Saharan Africa: Does It Spur Industrial Progress?," Economic Development and Cultural Change, University of Chicago Press, vol. 55(2), pages 393-423, January.
- Shiferaw, A., 2005. "Firm heterogeneity and market selection in Sub-Saharan Africa : does it spur industrial progress?," ISS Working Papers - General Series 1765019171, International Institute of Social Studies of Erasmus University (ISS), The Hague.
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- Shiferaw, Admasu & Bedi, Arjun S., 2010.
"The Dynamics of Job Creation and Job Destruction: Is Sub-Saharan Africa Different?,"
Proceedings of the German Development Economics Conference, Hannover 2010
59, Verein für Socialpolitik, Research Committee Development Economics.
- Shiferaw, Admasu & Bedi, Arjun S., 2009. "The Dynamics of Job Creation and Job Destruction: Is Sub-Saharan Africa Different?," IZA Discussion Papers 4623, Institute for the Study of Labor (IZA).
- Admasu Shiferaw & Arjun Bedi, 2010. "The Dynamics of Job Creation and Job Destruction: Is Sub-Saharan Africa Different?," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 22, Courant Research Centre PEG.
- Admasu Shiferaw, 2009. "Which Firms Invest Less Under Uncertainty? Evidence from Ethiopian Manufacturing," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 2, Courant Research Centre PEG, revised 30 Jun 2013.
- Fukunishi, Takahiro, 2013. "Political crisis and suspension of duty-free access in Madagascar : assessment of impacts on the garment industry," IDE Discussion Papers 422, Institute of Developing Economies, Japan External Trade Organization(JETRO).
- Klapper, Leora & Richmond, Christine, 2011.
"Patterns of business creation, survival and growth : evidence from Africa,"
Policy Research Working Paper Series
5828, The World Bank.
- Klapper, Leora & Richmond, Christine, 2011. "Patterns of business creation, survival and growth: Evidence from Africa," Labour Economics, Elsevier, vol. 18(S1), pages S32-S44.
- Shiferaw, Admasu, 2009. "Survival of Private Sector Manufacturing Establishments in Africa: The Role of Productivity and Ownership," World Development, Elsevier, vol. 37(3), pages 572-584, March.
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