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Impact of the business environment on output and productivity in Africa

Listed author(s):
  • Bah, El-hadj
  • Fang, Lei

We develop a general equilibrium model to assess the quantitative effects of the business environment, including regulations, crime, corruption, infrastructure and access to finance, on output and total factor productivity (TFP) in Sub-Saharan Africa. The first four dimensions are modeled as a tax on output and the finance dimension is modeled as a borrowing constraint. The model is simulated for a sample of Sub-Saharan African countries using the country-specific financial development and the country-specific joint distribution between productivity and taxes. We find that the simulated output and TFP are highly correlated with those in the data and the model accounts for 48% of the variation of output in the data. Access to finance alone accounts for 39% and the other four dimensions account for 11% of the dispersion in output.

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Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 114 (2015)
Issue (Month): C ()
Pages: 159-171

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Handle: RePEc:eee:deveco:v:114:y:2015:i:c:p:159-171
DOI: 10.1016/j.jdeveco.2015.01.001
Contact details of provider: Web page: http://www.elsevier.com/locate/devec

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