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A Rural-Urban Comparison of Manufacturing Enterprise Performance in Ethiopia

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  • Rijkers, Bob
  • Söderbom, Måns
  • Loening, Josef L.

Abstract

Summary Manufacturing enterprises in rural and urban Ethiopia are compared to examine how location and investment climate characteristics affect performance. Urban firms are larger, more capital intensive and have higher labor productivity than rural firms, yet there is no strong evidence of increasing returns to scale. The hypothesis that firms in rural towns have the same average total factor productivity as urban firms is not rejected; however, firms in remote rural areas are less productive. Rural firms grow less quickly than urban firms. These results can partly be attributed to differences in the quality of infrastructure, access to credit and transportation costs across rural and urban areas. Since rural firms operate in a business environment that is very different from its urban counterpart, lessons derived from urban investment climate surveys cannot immediately be transferred to rural areas.

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  • Rijkers, Bob & Söderbom, Måns & Loening, Josef L., 2010. "A Rural-Urban Comparison of Manufacturing Enterprise Performance in Ethiopia," World Development, Elsevier, vol. 38(9), pages 1278-1296, September.
    • Handle: RePEc:eee:wdevel:v:38:y:2010:i:9:p:1278-1296
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    2. Rijkers, Bob & Costa, Rita, 2012. "Gender and Rural Non-Farm Entrepreneurship," World Development, Elsevier, vol. 40(12), pages 2411-2426.
    3. Tadesse WODAJO, Tadesse & Dawit SENBET, Dawit, 2013. "Distributions Of Public And Private Manufacturing Firms And Determinants Of Productivity In Ethiopia," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(1).
    4. Martijn A. Boermans & Daan Willebrands, 2018. "Financial Constraints Matter: Empirical Evidence On Borrowing Behavior, Microfinance And Firm Productivity," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 1-24, June.
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    6. Nagler, Paula & Naudé, Wim, 2014. "Labor Productivity in Rural African Enterprises: Empirical Evidence from the LSMS-ISA," IZA Discussion Papers 8524, Institute of Labor Economics (IZA).
    7. Nagler,Paula & Naude, Wim & Nagler,Paula & Naude, Wim, 2014. "Non-farm enterprises in rural Africa : new empirical evidence," Policy Research Working Paper Series 7066, The World Bank.
    8. Pham, Tho & Talavera, Oleksandr & Zhang, Mao, 2018. "Self-employment, financial development, and well-being: Evidence from China, Russia, and Ukraine," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 754-769.
    9. Nagler, Paula & Naudé, Wim, 2017. "Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence," Food Policy, Elsevier, vol. 67(C), pages 175-191.
    10. Rijkers, Bob & Söderbom, Måns, 2013. "The Effects of Risk and Shocks on Non-Farm Enterprise Development in Rural Ethiopia," World Development, Elsevier, vol. 45(C), pages 119-136.
    11. Wim Naudé, 2017. "Cities and Entrepreneurs over Time: Like a Horse and Carriage?," Working Papers id:12321, eSocialSciences.
    12. Naudé, Wim, 2017. "Cities and Entrepreneurs over Time: Like a Horse and Carriage?," IZA Discussion Papers 11195, Institute of Labor Economics (IZA).
    13. Nagler, Paula & Naudé, Wim, 2014. "Young Entrepreneurs in Rural Africa: Prevalence, Determinants, Productivity," IZA Discussion Papers 8564, Institute of Labor Economics (IZA).
    14. Rajesh SN Raj & Kunal Sen, 2016. "Moving out of the bottom of the economy? Constraints to firm transition in the Indian informal manufacturing sector," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.
    15. Heshmati, Almas & Rashidghalam, Masoomeh, 2016. "Labour Productivity in Kenyan Manufacturing and Service Industries," IZA Discussion Papers 9923, Institute of Labor Economics (IZA).

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