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Road Infrastructure and Enterprise Dynamics in Ethiopia

Author

Listed:
  • 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, Economics Department, William & Mary.
    • Handle: RePEc:cwm:wpaper:129
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