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Working Paper - 208 - The Main Obstacles to Firms Growth in Senegal Implications for the Long-Run

Productivity gains are the prime engine of economic growth. This paper uses firm level accounting information from the Single Information Collecting Centre (CUCI) in Senegal over the period 1998- 2011. To investigate the two main obstacles to growth: poor education and poor access to electricity supply, we generate sectoral aggregates using firm level data. The results indicate that a 1% increase in the proportion of skilled technicians increases TFP by 5% (PMG) and by 24% (DOLS). This finding substantiates the conclusion of a recent report (AfDB, 2012) that emphasizes the importance of primary and vocational education to economic growth in Senegal. The report by the AfBD finds that the main obstacle to industrialization is poor access to electricity and the poor quality of infrastructure. Based on World Bank data on access to electricity and some strong but reasonable assumptions regarding sectoral power demand, we estimate the impact of quality adjusted access to electricity on firm productivity. In the long run, a 1% increase in access to electricity increases total factor productivity by 29% (PMG) and 21% (DOLS) and by 12% (PMG) in the short-run.

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Paper provided by African Development Bank in its series Working Paper Series with number 2141.

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Date of creation: 11 Sep 2014
Handle: RePEc:adb:adbwps:2141
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