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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'int�resse aux modes d'entr�e, de survie et de sortie de firmes �thiopiennes de produits manufactur�s en utilisant des donn�es de panel bas�es sur un recensement portant sur la p�riode 1996-2002. Les r�sultats prouvent l'existence d'un m�canisme de s�lection de march� sous jacent qui r�alloue les ressources vers des producteurs plus efficients et oblige les firmes inefficientes � fermer. Ce processus contribue aussi � agr�ger des croissances de productivit� alors qu'elle diminue dans le secteur en raison d'une baisse de la productivit� intra firme. L'article s'int�resse alors � l'accumulation des capacit�s technologiques, � leur r�le dans la croissance de la productivit� � l'�chelle de la firme. Les donn�es d'enqu�tes montrent une incidence mod�r�e des activit�s innovantes dans le secteur manufactur� �thiopien. Cependant, en tenant compte des autres caract�ristiques des entreprises, celles qui s'engagent dans un processus d'acquisition de capacit�s techniques montrent des taux de productivit� plus �lev�s,. La conclusion de l'article est la suivante: alors que les march�s contribuent � une meilleure croissance de la productivit� gr�ce � la concurrence, la comp�titivit� industrielle � long terme dans les pays en d�veloppement pourrait �tre compromise par des modalit�s d'apprentissage technologique inad�quates.

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Article provided by Taylor and Francis Journals in its journal The European Journal of Development Research.

Volume (Year): 19 (2007)
Issue (Month): 1 ()
Pages: 118-135

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Handle: RePEc:taf:eurjdr:v:19:y:2007:i:1:p:118-135
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