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What drives productivity in Tanzanian manufacturing firms: technology or institutions?

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  • Goedhuys, Micheline

    ()
    (UNU-MERIT)

  • Janz, Norbert

    ()
    (UNU-MERIT)

  • Mohnen, Pierre

    ()
    (UNU-MERIT)

Abstract

Using the rich micro data set of the World Bank Investment Climate Survey, this paper examines the determinants of productivity among manufacturing firms in the context of a least developed country, Tanzania. In particular it seeks to evaluate the importance of technological variables - such as R&D, education and training, innovation, foreign ownership, licensing and ISO certification - and institutional variables – such as access to credit, health of the workforce, regulation and business support services. Among the technological variables, R&D, and innovations in the form of new products or processes fail to produce any significant impact, and only foreign ownership, ISO certification and high education of the management appear to affect productivity. Some of the institutional variables on the contrary are highly significant and robust to different specifications of the model. As such, formal credit constraints, administrative burdens related to regulations and a lack of business support services seem to depress productivity, while membership of a business association produces the opposite effect. The results of a quantile regression further indicate that the educational level of the managers and access to formal credit are significant for the less productive firms only, whereas for the more productive firms it is having an ISO certification or being a member of a business association that are the significant determinants.

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Bibliographic Info

Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 037.

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Date of creation: 2006
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Handle: RePEc:unm:unumer:2006037

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Keywords: Development; Productivity; Innovation; Institutions;

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References

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  1. James Tybout, 1999. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Development and Comp Systems 9906001, EconWPA, revised 10 Jun 1999.
  2. Almeida, Rita & Fernandes, Ana Margarida, 2006. "Openness and technological innovations in developing countries : evidence from firm-level surveys," Policy Research Working Paper Series 3985, The World Bank.
  3. Mello, Marcelo & Perrelli, Roberto, 2003. "Growth equations: a quantile regression exploration," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 43(4), pages 643-667.
  4. Banerjee, Abhijit V. & Duflo, Esther, 2005. "Growth Theory through the Lens of Development Economics," Handbook of Economic Growth, Elsevier, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 7, pages 473-552 Elsevier.
  5. Johannes Van Biesebroeck, 2003. "Exporting Raises Productivity in Sub-Saharan African Manufacturing Plants," NBER Working Papers 10020, National Bureau of Economic Research, Inc.
  6. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
  7. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(397), pages 569-96, September.
  8. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521845731.
  9. Lall, Sanjaya, 1992. "Technological capabilities and industrialization," World Development, Elsevier, Elsevier, vol. 20(2), pages 165-186, February.
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Cited by:
  1. Menon, Nidhiya, 2011. "Got Technology? The Impact of Computers and Cell Phones on Productivity in a Difficult Business Climate: Evidence from Firms with Female Owners in Kenya," IZA Discussion Papers 5419, Institute for the Study of Labor (IZA).
  2. Goedhuys, Micheline & Sleuwaegen, Leo, 2009. "High-Growth Entrepreneurial Firms in Africa: A Quantile Regression Approach," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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