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Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence

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  • Marie-Ange Veganzones-Varoudakis

    () (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Hoang Thanh Mai Nguyen

    (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven)

Abstract

Drawing on the World Bank Enterprise Surveys, we revisit the link between firm-level investment climate and productive performance for a panel of enterprises surveyed twice in time in 70 developing countries and 11 manufacturing industries. We take advantage of the time dimension available for an increasing number of countries to tackle the endogeneity issue stressed in previous studies. We also use pertinent econometric techniques to address other biases inherent in the data (e.g.measurement errors, missing observations and multicollinearity). Our results reinforce previous findings by validating, with a larger than usual sample of countries and industries, the importance of a larger set of environment variables. We show that infrastructure quality, information & communication technologies, skills and experience of the labour force, cost of and access to financing, security and political stability, competition and government relation contribute to firms' and countries' performances gap. The empirical analysis also illustrates that firms which choose an outward orientation have higher productivity level. Nevertheless, outward oriented enterprises are more sensitive to investment climate limitations. These findings have important policy implications by showing which dimensions of the business environment, in which industry, could help manufacturing firms to be more competitive in the present context of increasing globalization.

Suggested Citation

  • Marie-Ange Veganzones-Varoudakis & Hoang Thanh Mai Nguyen, 2018. "Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence," Post-Print halshs-01618733, HAL.
  • Handle: RePEc:hal:journl:halshs-01618733
    DOI: 10.1080/00036846.2018.1488065
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01618733v2
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    Cited by:

    1. Marie-Ange Veganzones-Varoudakis & Patrick Plane, 2019. "Innovation, productivity, exports and the investment climate: A study based on Indian manufacturing firm-level data," Post-Print halshs-02137297, HAL.

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    More about this item

    Keywords

    Investment climate; outward orientation; total factor productivity; manufacturing; firm-level data;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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