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Which Firms Die? A Look at Manufacturing Firm Exit in Ghana

Listed author(s):
  • Frazer, Garth

In the context of Africa, which firms are driven out of business? Given that many markets do not function efficiently in Africa, the determinants of firm exit may not be the same fundamentals that force business closure elsewhere. In particular, less productive firms may not be the ones forced out of business. This article examines the determinants of manufacturing firm exit in the context of Ghana, with particular attention paid to productivity (or lack thereof) as a potential determinant of exit. Three different methods are used to measure productivity, two of which carefully handle the issue of simultaneity in production function estimation. In addition, other determinants of firm exit are examined and compared to previous results in the literature.

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File URL: http://dx.doi.org/10.1086/427246
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Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 53 (2005)
Issue (Month): 3 (April)
Pages: 585-617

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Handle: RePEc:ucp:ecdecc:y:2005:v:53:i:3:p:585-617
Contact details of provider: Web page: http://www.journals.uchicago.edu/EDCC/

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  1. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
  2. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  3. G. Steven Olley & Ariel Pakes, 1992. "The Dynamics of Productivity in the Telecommunications Equipment Industry," NBER Working Papers 3977, National Bureau of Economic Research, Inc.
  4. Das, Sanghamitra & Srinivasan, Krishna, 1997. "Duration of firms in an infant industry: the case of Indian computer hardware," Journal of Development Economics, Elsevier, vol. 53(1), pages 157-167, June.
  5. World Bank, 2003. "World Development Indicators 2003," World Bank Publications, The World Bank, number 13920.
  6. Måns Söderbom & Francis Teal, 2000. "Skills, investment and exports from manufacturing firms in Africa," CSAE Working Paper Series 2000-08, Centre for the Study of African Economies, University of Oxford.
  7. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  8. Jan Willem Gunning & Paul Collier, 1999. "Explaining African Economic Performance," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 64-111, March.
  9. Teal, Francis, 1996. "The Size and sources of economic rents in a developing country manufacturing labour market," Economic Journal, Royal Economic Society, vol. 106(437), pages 963-976, July.
  10. Hirsch, Barry T, 1991. "Union Coverage and Profitability among U.S. Firms," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 69-77, February.
  11. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
  12. Tybout, James R, 1992. "Linking Trade and Productivity: New Research Directions," World Bank Economic Review, World Bank Group, vol. 6(2), pages 189-211, May.
  13. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," Review of Economic Studies, Oxford University Press, vol. 62(1), pages 53-82.
  14. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  15. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
  16. repec:oxf:wpaper:wps/2000-08 is not listed on IDEAS
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