IDEAS home Printed from https://ideas.repec.org/p/hhs/gunwpe/0027.html
   My bibliography  Save this paper

Informality, Ethnicity and Productivity: Evidence from Small Manufacturers in Kenya

Author

Listed:
  • Bigsten, Arne

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Kimuyu, Peter

    (Institute of Policy Analysis & Research, Nairobi, Kenya)

  • Lundvall, Karl

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

A rapidly increasing share of firms in Kenya consists of not only small but also informal establishments. This paper investigates the role of ethnicity and other factors in the choice of formality status at start-up. Differences in productivity, investment and growth across the formality and ethnicity divide are also investigated. The results show that while African-owned firms are more likely to start informally, enterprises owned by either professionals or persons who are older are less likely to start informally. African informal firms are more efficient than African formal firms are, but both categories are less efficient than Asian-owned formal firms are. We conclude that ethnicity is important in explaining choice of formality status, while the network implications of ethnicity account for the differences in firm productivity, investment and growth prospects. It is possible to mainstream informal enterprises by reducing cost related to business registration. However, additional analysis is needed to unpack the ethnic variable en route to developing policy interventions for improving the performance of small scale manufacturing in Kenya.

Suggested Citation

  • Bigsten, Arne & Kimuyu, Peter & Lundvall, Karl, 2000. "Informality, Ethnicity and Productivity: Evidence from Small Manufacturers in Kenya," Working Papers in Economics 27, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0027
    as

    Download full text from publisher

    File URL: http://swopec.hhs.se/gunwpe/papers/gunwpe0027.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Fortin, Bernard & Marceau, Nicolas & Savard, Luc, 1997. "Taxation, wage controls and the informal sector," Journal of Public Economics, Elsevier, vol. 66(2), pages 293-312, November.
    2. Mead, Donald C. & Morrisson, Christian, 1996. "The informal sector elephant," World Development, Elsevier, vol. 24(10), pages 1611-1619, October.
    3. repec:oup:jafrec:v:10:y:2001:i:suppl_2:p:109-142. is not listed on IDEAS
    4. Harriss JC., 1990. "Linkages between the formal and the informal sectors in developing countries: a review of literature," ILO Working Papers 992744903402676, International Labour Organization.
    5. Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Abena Oduro & Remco Oostendorp & Catherine Pattillo & Måns Söderbom & Francis Teal & Albert Zeu, 1998. "Contract flexibility and conflict resolution: Evidence from African manufacturing," CSAE Working Paper Series 1998-21, Centre for the Study of African Economies, University of Oxford.
    6. Marcel Fafchamps, 2001. "Networks, Communities and Markets in Sub‐Saharan Africa: Implications for Firm Growth and Investment," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 10(suppl_2), pages 109-142.
    7. repec:fth:oxesaf:99-24 is not listed on IDEAS
    8. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    9. Ranis, Gustav & Stewart, Frances, 1999. "V-Goods and the Role of the Urban Informal Sector in Development," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 259-288, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bigsten, Arne & Durevall, Dick, 2002. "Is Globalisation Good for Africa?," Working Papers in Economics 67, University of Gothenburg, Department of Economics.
    2. Fenske, James, 2010. "Institutions in African history and development: A review essay," MPRA Paper 23120, University Library of Munich, Germany.
    3. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.

    More about this item

    Keywords

    informal sector; informality; ethnicity; productivity; manufacturing; Kenya;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:gunwpe:0027. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Andersson). General contact details of provider: http://edirc.repec.org/data/naiguse.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.