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Firm Size and Structural Change: A Case Study of Ethiopia-super- †

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  • Måns Söderbom

Abstract

I use firm-level census data to study changes in the structure of Ethiopia's manufacturing sector between 1998 and 2008. Over this period, aggregate manufacturing value-added grew at the same rate as GDP, the number of manufacturing firms more than doubled, and average firm size fell by more than 40%. I highlight substantial heterogeneity in economic performance across firms, and emphasise a strong association between firm size and value-added per worker. I find that 29% of the value-added size gap can be attributed to differences in product selection across small and large firms. I find no systematic difference in the output price charged by small and large firms for a given product. I therefore attribute the remaining value-added size gap to a higher level of physical labour productivity in large than in small firms. I conclude that small and large firms in Ethiopia use quite different technologies to produce similar products, and that an increase in the number of large firms would raise value-added per worker and ultimately GDP per capita in the country. Copyright 2012 , Oxford University Press.

Suggested Citation

  • Måns Söderbom, 2012. "Firm Size and Structural Change: A Case Study of Ethiopia-super- †," Journal of African Economies, Centre for the Study of African Economies, vol. 21(suppl_2), pages -151, January.
    • Handle: RePEc:oup:jafrec:v:21:y:2012:i:suppl_2:p:-ii151
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    File URL: http://hdl.handle.net/10.1093/jae/ejr046
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    Cited by:

    1. Paul Collier, 2013. "Aid as a Catalyst for Pioneer Investment," WIDER Working Paper Series wp-2013-004, World Institute for Development Economic Research (UNU-WIDER).
    2. Girum Abebe, 2015. "State-inducement Versus Self-initiation: A Comparative Study of Micro and Small Enterprises in Ethiopia," Working Papers 013, Policy Studies Institute.
    3. Paul COLLIER, 2014. "Fragile African States: What Should Donors Do?," Working Papers P95, FERDI.
    4. Melaku T. Abegaz, 2013. "Total Factor Productivity and Technical Efficiency in the Ethiopian Manufacturing Sector," Working Papers 010, Policy Studies Institute.
    5. Carmignani, Fabrizio & Mandeville, Thomas, 2014. "Never been industrialized: A tale of African structural change," Structural Change and Economic Dynamics, Elsevier, vol. 31(C), pages 124-137.
    6. Paul COLLIER, 2014. "Fragile African States: What Should Donors Do?," Working Papers P95, FERDI.
    7. Collier, Paul, 2013. "Aid as a Catalyst for Pioneer Investment," WIDER Working Paper Series 004, World Institute for Development Economic Research (UNU-WIDER).
    8. Andrew Kerr & Bruce McDougall, 2020. "What is a firm census in a developing country? An answer from Ghana," SALDRU Working Papers 262, Southern Africa Labour and Development Research Unit, University of Cape Town.

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