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Network Proximity and Business Practices in African Manufacturing

  • Marcel Fafchamps
  • Mans Soderbom

We document empirical patterns of correlation in the adoption of technological innovation and contractual practices among manufacturing firms in Ethiopia and Sudan.� The analysis is based on 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 one firm in a given location is using a certain practice, others nearby are less likely to do so.� These results appear out of tune with the policy discussion of how the economic performance of African's manufacturing sector can be improved.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2011-08.

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Date of creation: 01 Apr 2011
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Handle: RePEc:oxf:wpaper:wps/2011-08
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