This 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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Volume (Year): 55 (2007) Issue (Month): 2 (January) Pages: 393-423 Download reference. The following formats are available: HTML
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Boyan Jovanovic & Glenn MacDonald, 1994.
"Competitive Diffusion,"
NBER Working Papers
4463, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Jovanovic, Boyan & MacDonald, Glenn M., 1988.
"Competitive Diffusion,"
Working Papers
88-29, C.V. Starr Center for Applied Economics, New York University.
[Downloadable!]
Jovanovic, B. & MacDonald, G.M., 1991.
"Competitive Diffusion,"
Papers
92-08, Rochester, Business - Financial Research and Policy Studies.
Bigsten, A. & Collier, P. & Dercon, S. & Fafchamps, M. & Gauthier, B. & Gunning, J.W. & Habarurema, J. & Oostendorp, R. & Pattillo, C. & Soderbom, M. & Teal, F. & Zeufack, A., 2000.
"Exports and Firm-Level Efficiency in African Manufacturing,"
Working Papers Series
2000-16, Centre for the Study of African Economies, University of Oxford.
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