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Incentives and Firms’ Productivity: Exploring Multidimensional Fiscal Incentives in a Developing Country

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  • Efobi Uchenna Rapuluchukwu
  • Tanankem Voufo Belmondo
  • Beecroft Ibukun

Abstract

This paper investigates the impact of fiscal incentives on firms’ productivity using Cameroonian firms as a case. We use data from the World Bank Enterprise Survey for over 300 firms to calculate the productivity of firms. The Enterprise Survey also contains unique measures of assessing firms’ beneficiary status from different categories of fiscal incentives such as import duty exemption, profit tax exemption and export financing. The availability of these measures at the firm level allows us to conduct an impact analysis using the propensity score matching technique. Our results show a significant and positive impact of the productivity of firms that benefit from profit tax exemption and export financing. However, when considering import duty exemption, the significance of this variable was not consistent. The paper thus provides support for the argument that the government’s involvement in the firm should be targeted at rewarding outputs and not supporting processes, and thus provides an essential element of a strategy for industrialisation.

Suggested Citation

  • Efobi Uchenna Rapuluchukwu & Tanankem Voufo Belmondo & Beecroft Ibukun, 2016. "Incentives and Firms’ Productivity: Exploring Multidimensional Fiscal Incentives in a Developing Country," Research papers & Policy papers 1606, Policy Center for the New South.
    • Handle: RePEc:ocp:rpaper:rp-16/03
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    Cited by:

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    2. Alessandra Amendola & Marinella Boccia & Gianluca Mele & Luca Sensini, 2023. "Do fiscal policies affect the firms’ growth and performance? Urban versus rural area," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 13(1), pages 1-33, March.
    3. Uchenna R. Efobi & Belmondo V. Tanankem & Simplice A. Asongu & Ibukun Beecroft, 2016. "Exploring Multidimensional Financial Inclusion and Manufacturing Firms Performance in a Developing Country: The Case of Nigeria," Research Africa Network Working Papers 16/043, Research Africa Network (RAN).
    4. Alessandra Amendola & Marinella Boccia & Gianluca Mele & Luca Sensini, 2020. "Fiscal Policies and Performance: Evidence from Dominican Republic firms," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(5), pages 1-16.

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