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Competitive Selection and Technological Capabilities in Ethiopian Manufacturing


  • Admasu Shiferaw


This paper examines the entry, survival and exit patterns of Ethiopian manufacturing firms using census-based panel data for the period 1996 to 2002. The evidence reveals an underlying market selection mechanism that reallocates resources towards more efficient producers and forces inefficient firms to close down. This process also contributes to aggregate productivity growth although the manufacturing sector continued to lose productivity due to intra-firm productivity decline. The paper then explores the accumulation of technological capabilities and their role in firm-level productivity growth. Data from a sample survey show a very sparse incidence of innovative activities in Ethiopian manufacturing. Nonetheless, firms that engage in building technical capabilities exhibit higher levels of productivity after controlling for other firm characteristics. The paper concludes that while markets contribute to aggregate productivity growth by exerting competitive selection, long-term industrial competitiveness in developing countries could be stifled because of inadequate technological learning. Cet article s'intéresse aux modes d'entrée, de survie et de sortie de firmes éthiopiennes de produits manufacturés en utilisant des données de panel basées sur un recensement portant sur la période 1996-2002. Les résultats prouvent l'existence d'un mécanisme de sélection de marché sous jacent qui réalloue les ressources vers des producteurs plus efficients et oblige les firmes inefficientes à fermer. Ce processus contribue aussi à agréger des croissances de productivité alors qu'elle diminue dans le secteur en raison d'une baisse de la productivité intra firme. L'article s'intéresse alors à l'accumulation des capacités technologiques, à leur rôle dans la croissance de la productivité à l'échelle de la firme. Les données d'enquêtes montrent une incidence modérée des activités innovantes dans le secteur manufacturé éthiopien. Cependant, en tenant compte des autres caractéristiques des entreprises, celles qui s'engagent dans un processus d'acquisition de capacités techniques montrent des taux de productivité plus élevés,. La conclusion de l'article est la suivante: alors que les marchés contribuent à une meilleure croissance de la productivité grâce à la concurrence, la compétitivité industrielle à long terme dans les pays en développement pourrait être compromise par des modalités d'apprentissage technologique inadéquates.

Suggested Citation

  • Admasu Shiferaw, 2007. "Competitive Selection and Technological Capabilities in Ethiopian Manufacturing," The European Journal of Development Research, Taylor and Francis Journals, vol. 19(1), pages 118-135.
  • Handle: RePEc:taf:eurjdr:v:19:y:2007:i:1:p:118-135 DOI: 10.1080/09578810601144376

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    Cited by:

    1. repec:bla:afrdev:v:29:y:2017:i:3:p:367-375 is not listed on IDEAS
    2. Asma Raies, 2013. "Firm entry and aggregate efficiency growth: An optimal dynamic - Program of entry and R&D investment," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 10(3), pages 355-376, December.
    3. Habtamu Tesfaye Edjigu, 2016. "Firm Growth and Technical Efficiency in Ethiopia: The Role of Firm Size and Finance," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(10), pages 1-13, October.

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