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Firm productivity and infrastructure costs in east Africa

Author

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  • Iimi,Atsushi
  • Humphrey,Richard Martin
  • Melibaeva,Sevara

Abstract

Infrastructure is an important driving force for economic growth. It reduces trade and transaction costs and stimulates the productivity of the economy. Africa has been lagging behind in the global manufacturing market. Among others, infrastructure is an important constraint in many African countries. Using firm-level data for East Africa, the paper reexamines the relationship between firm performance and infrastructure. It is shown that labor costs are by far the most important to stimulate firm production. Among the infrastructure sectors, electricity costs have the highest output elasticity, followed by transport costs. In addition, the paper shows that the quality of infrastructure is important to increase firm production. In particular, quality transport infrastructure seems to be essential. The paper also finds that agglomeration economies can reduce firm costs. The agglomeration elasticity is estimated at 0.03?0.04.

Suggested Citation

  • Iimi,Atsushi & Humphrey,Richard Martin & Melibaeva,Sevara, 2015. "Firm productivity and infrastructure costs in east Africa," Policy Research Working Paper Series 7278, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7278
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    Cited by:

    1. Ebuka Christian Orjiakor, 2022. "Business climate and firm exit in developing countries: evidence from Nigeria," Future Business Journal, Springer, vol. 8(1), pages 1-13, December.
    2. Sanja Borkovic & Peter Tabak, 2018. "Public investment and corporate productivity in Croatia," Public Sector Economics, Institute of Public Finance, vol. 42(2), pages 171-186.
    3. Jiacheng Xu & Jianjun Bai & Jun Chen, 2019. "An Improved Indicator System for Evaluating the Progress of Sustainable Development Goals (SDGs) Sub-Target 9.1 in County Level," Sustainability, MDPI, vol. 11(17), pages 1-22, September.
    4. Altenburg, Tilman & Chen, Xiao & Lütkenhorst, Wilfried & Staritz, Cornelia & Whitfield, Lindsay, 2020. "Exporting out of China or out of Africa? Automation versus relocation in the global clothing industry," IDOS Discussion Papers 1/2020, German Institute of Development and Sustainability (IDOS).
    5. Onesmus Mbaabu Mutiiria & Qingjiang Ju & Koffi Dumor, 2020. "Infrastructure and inclusive growth in sub-Saharan Africa: An empirical analysis," Progress in Development Studies, , vol. 20(3), pages 187-207, July.

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    Keywords

    Transport Economics Policy&Planning; E-Business; Energy Production and Transportation; Economic Theory&Research; Infrastructure Economics;
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