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Impact of the business environment on output and productivity in Africa

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  • Bah, El-hadj M.
  • Fang, Lei

Abstract

Africa is the poorest part of the world and it has the worst environment for long term business success by most standards. Empirical works normally find a negative correlation between income per worker and measures for poor business environment. This paper develops a general equilibrium model to assess the quantitative effects of the business environment, including access to finance, regulation, crime, corruption and infrastructure, on output and TFP for 30 Sub-Saharan African countries. We find that the quantitative effects of these areas of the business environment are large. They together can explain about 67% of the variation in income per capita relative to the US. Improving these dimensions of the business environment will be key for the long term development of the continent.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 32225.

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Date of creation: 12 Jul 2011
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Handle: RePEc:pra:mprapa:32225

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Keywords: Business environment; Investment Climate; African Development; Productivity;

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