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Explaining Africa's (Dis)advantage

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  • Ann E. Harrison
  • Justin Yifu Lin
  • L. Colin Xu

Abstract

Africa’s economic performance has been widely viewed with pessimism. In this paper, we use firm-level data for around 80 countries to examine formal firm performance. Without controls, manufacturing African firms perform significantly worse than firms in other regions. They have lower productivity levels and growth rates, export less, and have lower investment rates. Once we control for geography, political competition and the business environment, formal African firms lead in productivity levels and growth. Africa’s conditional advantage is higher in low-tech than in high-tech manufacturing, and exists in manufacturing but not in services. The key factors explaining Africa’s disadvantage at the firm level are lack of infrastructure, access to finance, and political competition.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18683.

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Date of creation: Jan 2013
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Publication status: published as Harrison, Ann E. & Lin, Justin Yifu & Xu, Lixin Colin, 2014. "Explaining Africa’s (Dis)advantage," World Development, Elsevier, Elsevier, vol. 63(C), pages 59-77.
Handle: RePEc:nbr:nberwo:18683

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Cited by:
  1. AfDB AfDB, 2014. "Working Paper - 208 - The Main Obstacles to Firms Growth in Senegal Implications for the Long-Run," Working Paper Series, African Development Bank 2141, African Development Bank.
  2. McKenzie, David, 2011. "How can we learn whether firm policies are working in africa ? challenges (and solutions?) for experiments and structural models," Policy Research Working Paper Series 5632, The World Bank.

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