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Skills, investment and exports from manufacturing firms in Africa

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  • Francis Teal
  • MÃ¥ns Söderbom
  • Francis Teal
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    Abstract

    It has been argued that Africa will not be able to export manufactures as it lacks the necessary skills. Without an ability to export there will only be an incentive to invest in the sector if domestic demand grows rapidly. Comparative data for four African countries - the Cameroon, Ghana, Kenya and Zimbabwe - shows that in the early 1990s investment in manufacturing remained very low. The micro evidence on manufacturing exports is wholly consistent with the macro in suggesting these are, for most African countries, negligible. An exception is Zimbabwe. The paper uses a longer time series from Ghana to ask how skills have impacted on manufacturing investment and exports in the 1990s. Two dimensions of skills are defined and measured. The first is that observable in the education and experience of the workforce. The second is the underlying efficiency with which the firm operates. The latter is shown to be a significant determinant of both investment and exports. These exports are relatively capital intensive; unskilled labour intensive exports remain negligible. Possible reasons for these outcomes are discussed.

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    File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/20-08text.pdf
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    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2000-08.

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    Date of creation: 01 May 2000
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    Handle: RePEc:oxf:wpaper:wps/2000-08

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    Keywords: African manufacturing; exports; investment.;

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    References

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    1. Abel, Andrew B & Eberly, Janice C, 1994. "A Unified Model of Investment under Uncertainty," American Economic Review, American Economic Association, vol. 84(5), pages 1369-84, December.
    2. Catherine Pattillo, 1998. "Investment, Uncertainty, and Irreversibility in Ghana," IMF Staff Papers, Palgrave Macmillan, vol. 45(3), pages 522-553, September.
    3. Adrian Wood & Kersti Berge, 1997. "Exporting manufactures: Human resources, natural resources, and trade policy," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 35-59.
    4. Tybout, James R. & Westbrook, M. Daniel, 1995. "Trade liberalization and the dimensions of efficiency change in Mexican manufacturing industries," Journal of International Economics, Elsevier, vol. 39(1-2), pages 53-78, August.
    5. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
    6. Sofronis Clerides & Saul Lach & James Tybout, 1996. "Is "Learning-by-Exporting" Important? Micro-Dynamic Evidence from Colombia, Mexico and Morocco," NBER Working Papers 5715, National Bureau of Economic Research, Inc.
    7. Francis Teal, 1999. "The Ghanaian manufacturing sector 1991-95: Firm growth, productivity and convergence," Journal of Development Studies, Taylor & Francis Journals, vol. 36(1), pages 109-127.
    8. Francis Teal, 1999. "Why can Mauritius export manufactures and Ghana not?," CSAE Working Paper Series 1999-10, Centre for the Study of African Economies, University of Oxford.
    9. Wood, Adrian & Mayer, Jorg, 2001. "Africa's Export Structure in a Comparative Perspective," Cambridge Journal of Economics, Oxford University Press, vol. 25(3), pages 369-94, May.
    10. Moon, Choon-Geol & Stotsky, Janet G, 1993. "The Effect of Rent Control on Housing Quality Change: A Longitudinal Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1114-48, December.
    11. Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, vol. 92(2), pages 233-274, October.
    12. Andrew B. Bernard & J. Bradford Jensen, 1999. "Exporting and Productivity," NBER Working Papers 7135, National Bureau of Economic Research, Inc.
    13. Francis Teal, 1999. "Why can Mauritius export manufactures and Ghana not?," Economics Series Working Papers WPS/1999-10, University of Oxford, Department of Economics.
    14. Owens, Trudy & Wood, Adrian, 1997. "Export-oriented industrialization through primary processing?," World Development, Elsevier, vol. 25(9), pages 1453-1470, September.
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    Cited by:
    1. Paul Collier & Marcel Fafchamps & Francis Teal & Stefan Dercon, 2002. "Do African Manufacturing Firms Learn from Exporting?," Economics Series Working Papers WPS/2002-09, University of Oxford, Department of Economics.
    2. Francis Teal & Måns Söderbom & Neil Rankin, 2005. "Exporting from manufacturing firms in Sub-Saharan Africa," Economics Series Working Papers GPRG-WPS-036, University of Oxford, Department of Economics.
    3. Marcel Fafchamps, 2007. "Human Capital, Exports, and Wages," Economics Series Working Papers GPRG-WPS-069, University of Oxford, Department of Economics.
    4. Adeoti, John Olatunji, 2012. "Technology-related factors as determinants of export potential of Nigerian manufacturing firms," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 487-503.

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