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Network Proximity and Business Practices in African Manufcaturing

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  • Marcel Fafchamps
  • Måns Söderbom

Abstract

We document empirical patterns of correlation in the adoption of technological innovation and contractural practices among manfacturing firms in Ethiopia and Sudan. The analysis is based upon network data indicating whether any two firms in our sample do business with each other, whether they buy inputs from a common supplier and whether they sell output to a common client. We only find limited support for the commonly held idea that firms that are more proximate in a network sense are more likely to adopt similar practices. For certain practices, adoption decisions appear instead to be local strategic substitutes: if ones firms in a given location is using a certain practice, others nearby are less likely to do so. These results appear out of tune with policy discussion of how the economic performance of African's manufcaturing sector can be improved.

Suggested Citation

  • Marcel Fafchamps & Måns Söderbom, 2011. "Network Proximity and Business Practices in African Manufcaturing," CSAE Working Paper Series 2011-08, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:2011-08
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    Cited by:

    1. J. Muzurura, 2019. "Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size," The Economics and Finance Letters, Conscientia Beam, vol. 6(1), pages 9-24.
    2. Marcel Fafchamps & Simon Quinn, 2018. "Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment," The World Bank Economic Review, World Bank, vol. 32(3), pages 656-675.
    3. Marco Sanfilippo & Adnan Seric, 2016. "Spillovers from agglomerations and inward FDI: a multilevel analysis on sub-Saharan African firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 147-176, February.
    4. Eric Strobl & Marie-Anne Valfort, 2015. "The Effect of Weather-Induced Internal Migration on Local Labor Markets. Evidence from Uganda," The World Bank Economic Review, World Bank, vol. 29(2), pages 385-412.
    5. Marcel Fafchamps & Måns Söderbom & Monique van den Boogart, 2022. "Adoption with Social Learning and Network Externalities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(6), pages 1259-1282, December.
    6. Beck, Ulrik & Bjerge, Benedikte, 2017. "Pro-poor Land Transfers and the Importance of Land Abundance and Ethnicity in The Gambia," World Development, Elsevier, vol. 99(C), pages 122-140.
    7. Sokty Chhair & Carol Newman, 2014. "Clustering, Competition, and Spillover Effects: Evidence from Cambodia," WIDER Working Paper Series wp-2014-065, World Institute for Development Economic Research (UNU-WIDER).
    8. repec:ipg:wpaper:2014-460 is not listed on IDEAS
    9. Mattea Stein, 2021. "Know-how and Know-who: Effects of a Randomized Training on Network Changes Among Small Urban Entrepreneurs," CSEF Working Papers 622, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    10. Eyerusalem Siba & Måns Söderbom & Arne Bigsten & Mulu Gebreeyesus, 2020. "The relationship among enterprise clustering, prices, and productivity in Ethiopia’s manufacturing sector," Review of Development Economics, Wiley Blackwell, vol. 24(3), pages 831-854, August.
    11. Comola, Margherita & Inguaggiato, Carla & Mendola, Mariapia, 2024. "Social networks and economic transformation: Evidence from a resettled village in Brazil," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 17-34.

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