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Size and efficiency in African manufacturing firms: Evidence from firm-level panel data

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  • Måns Söderbom
  • Francis Teal

Abstract

Three dimensions of the performance of firms in Ghana’s manufacturing sector are investigated in this paper: their technology and the importance of technical and allocative efficiency. We show that the diversity of factor choices in not due to a non-homothetic technology. Observable skills are not quantitatively important as determinants of productivity. Technical inefficiency is not lower in firms with foreign ownership or older firms and its dispersion across firms is similar to that found in other economies. Large firms face far higher relative labour costs than small firms. If these factor price differentials could be levelled out, substantial gains thorough improvements in allocative efficiency would be possible.

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Bibliographic Info

Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2002-07.

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Date of creation: 2002
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Handle: RePEc:csa:wpaper:2002-07

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Keywords: African manufacturing; productivity; efficiency; human capital; firm size;

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