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Road Infrastructure and Enterprise Dynamics in Ethiopia

Author

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  • Admasu Shiferaw

    (Department of Economics, The College of William and Mary)

  • Måns Söderbom

    (Economics Department, University of Gothenburg, Sweden)

  • Eyersusalem Siba

    (Economics Department, University of Gothenburg, Sweden)

  • Getnet Alemu

    (College of Development Studies, Addis Ababa University, Ethiopia)

Abstract

This paper investigates firm level responses to a large scale public investment program on road infrastructure in Ethiopia during 1997 to 2010. Firms' location choices and average start-up size are examined by combining town level panel data on road accessibility with a panel of manufacturing firms for the period 1996 to 2009. We find econometric results showing that better road access increases a town's attractiveness for manufacturing firms. While towns with initially large number of firms continue to attract more firms, there has been a tendency toward convergence in the distribution of firms, reducing their geographic concentration. Average startup size in isolated locations is also smaller relative to firms entering well connected markets in terms of road access. We conclude that improved road infrastructure has a favorable impact on the entry patterns and structure of the manufacturing sector in Ethiopia.

Suggested Citation

  • Admasu Shiferaw & Måns Söderbom & Eyersusalem Siba & Getnet Alemu, 2013. "Road Infrastructure and Enterprise Dynamics in Ethiopia," Working Papers 129, Department of Economics, College of William and Mary.
    • Handle: RePEc:cwm:wpaper:129
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    References listed on IDEAS

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    1. Sam Jones & John Page & Abebe Shimeles & Finn Tarp & John Page & Måns Söderbom, 2015. "Is Small Beautiful? Small Enterprise, Aid and Employment in Africa," African Development Review, African Development Bank, vol. 27(S1), pages 44-55, October.
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    6. repec:unu:wpaper:wp2012-94 is not listed on IDEAS
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    Cited by:

    1. Boto-Garcia, David & Leoni, Veronica, 2022. "The Structural and Productivity Effects of Infrastructure Provision in Developed and Developing Countries," Efficiency Series Papers 2022/03, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    2. Orea, Luis & José A. Pérez-Méndez & Álvarez, Inmaculada C., 2021. "The Structural and Productivity Effects of Infrastructure Provision in Developed and Developing Countries," Efficiency Series Papers 2021/05, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    3. Christian Darko & Giovanni Occhiali & Enrico Vanino, 2021. "The Chinese are Here: Import Penetration and Firm Productivity in Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 57(12), pages 2112-2135, December.
    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 Group, vol. 29(2), pages 385-412.
    5. Tesfaye T. Lemma & Tendai Gwatidzo & Mthokozisi Mlilo, 2023. "Gender differences in business performance: evidence from Kenya and South Africa," Small Business Economics, Springer, vol. 60(2), pages 591-614, February.
    6. Matteo Fiorini & Marco Sanfilippo, 2022. "Roads and Jobs in Ethiopia [When Should You Adjust Standard Errors for Clustering?”]," The World Bank Economic Review, World Bank Group, vol. 36(4), pages 999-1020.
    7. Andrew Kerr & Bruce McDougall, 2020. "What is a firm census in a developing country? An answer from Ghana," SALDRU Working Papers 262, Southern Africa Labour and Development Research Unit, University of Cape Town.
    8. Remi Jedwab & Adam Storeygard, 2019. "Economic and Political Factors in Infrastructure Investment: Evidence from Railroads and Roads in Africa 1960–2015," Economic History of Developing Regions, Taylor & Francis Journals, vol. 34(2), pages 156-208, May.
    9. Champagne, Marie-Pier & Dubé, Jean, 2023. "The impact of transport infrastructure on firms’ location decision: A meta-analysis based on a systematic literature review," Transport Policy, Elsevier, vol. 131(C), pages 139-155.
    10. Elena Perra, & Sanfilippo, Marco & Sundaram, Asha, 2022. "Roads, Competition, and the Informal Sector," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202221, University of Turin.
    11. Daniel A. Mekonnen & Elise F. Talsma & Laura Trijsburg & Vincent Linderhof & Thom Achterbosch & Aafke Nijhuis & Ruerd Ruben & Inge D. Brouwer, 2020. "Can household dietary diversity inform about nutrient adequacy? Lessons from a food systems analysis in Ethiopia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 12(6), pages 1367-1383, December.
    12. Zheming Liu & Bin Li & Saixing Zeng & Hongquan Chen, 2020. "Spillovers from transport infrastructures onto firm productivity: An analytical and empirical study," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1583-1609, November.
    13. Darko, Christian K. & Occhiali, Giovanni & Vanino, Enrico, 2018. "The Chinese are Here: Firm Level Analysis of Import Competition and Performance in Sub-Saharan Africa," ETA: Economic Theory and Applications 273142, Fondazione Eni Enrico Mattei (FEEM).
    14. Admasu Shiferaw, 2016. "Constraints to Private Investment in a High-Growth Environment: Firm-level Evidence from Ethiopia," Working Papers 168, Department of Economics, College of William and Mary.
    15. Moller, Lars Christian & Wacker, Konstantin M., 2017. "Explaining Ethiopia’s Growth Acceleration—The Role of Infrastructure and Macroeconomic Policy," World Development, Elsevier, vol. 96(C), pages 198-215.
    16. Elena Perra, 2022. "Road to Division: Ethnic Favouritism in the Provision of Road Infrastructure in Ethiopia," Working Papers - Economics wp2022_01.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    17. Bayissa Badada & G. Delina & Sun Baiqing & Ramaswamy Krishnaraj, 2023. "Economic Impact of Transport Infrastructure in Ethiopia: The Role of Foreign Direct Investment," SAGE Open, , vol. 13(1), pages 21582440231, March.
    18. Rajesh SN Raj & Kunal Sen, 2016. "Moving out of the bottom of the economy? Constraints to firm transition in the Indian informal manufacturing sector," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.
    19. Daniel Gurara & Dawit Tessema, 2018. "Losing to Blackouts: Evidence from Firm Level Data," IMF Working Papers 2018/159, International Monetary Fund.
    20. Moller,Lars Christian & Wacker,Konstantin M., 2015. "Ethiopia?s growth acceleration and how to sustain it?insights from a cross-country regression model," Policy Research Working Paper Series 7292, The World Bank.
    21. Lashitew, Addisu A., 2017. "The Uneven Effect of Financial Constraints: Size, Public Ownership, and Firm Investment in Ethiopia," World Development, Elsevier, vol. 97(C), pages 178-198.
    22. Fiorini, Matteo & Sanfilippo, Marco & Sundaram, Asha, 2021. "Trade liberalization, roads and firm productivity," Journal of Development Economics, Elsevier, vol. 153(C).

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    Keywords

    Road infrastructure; Firm Entry; Location Choice; Startup-Size; Ethiopian Manufacturing;
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