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The Effects of Pollution and Business Environment on Firm Productivity in Africa

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  • Maria E. Soppelsa
  • Nancy Lozano-Gracia
  • L. Colin Xu

Abstract

In this article, we explore the links between city competitiveness and air pollution and business environment. Because competitive cities not only attract more productive firms but also facilitate their business, we choose to look at firm performance as a proxy for city competitiveness. We particularly focus on African firms because this region is developing fast, experiencing increasing pollution levels and the effects of agglomeration economies. We find two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.

Suggested Citation

  • Maria E. Soppelsa & Nancy Lozano-Gracia & L. Colin Xu, 2021. "The Effects of Pollution and Business Environment on Firm Productivity in Africa," International Regional Science Review, , vol. 44(2), pages 203-228, March.
    • Handle: RePEc:sae:inrsre:v:44:y:2021:i:2:p:203-228
    DOI: 10.1177/0160017620931572
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    References listed on IDEAS

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    Cited by:

    1. Guo, Liwen & Cheng, Zhiming & Tani, Massimiliano & Cook, Sarah & Zhao, Jiaqi & Chen, Xi, 2022. "Air Pollution and Entrepreneurship," GLO Discussion Paper Series 1208, Global Labor Organization (GLO).
    2. Silvia Muzi & Filip Jolevski & Kohei Ueda & Domenico Viganola, 2023. "Productivity and firm exit during the COVID-19 crisis: cross-country evidence," Small Business Economics, Springer, vol. 60(4), pages 1719-1760, April.
    3. Phisek Srinamphon & Sainatee Chernbumroong & Korrakot Yaibuathet Tippayawong, 2022. "The Effect of Small Particulate Matter on Tourism and Related SMEs in Chiang Mai, Thailand," Sustainability, MDPI, vol. 14(13), pages 1-9, July.

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