Cross-country comparative analysis of SMEs’ TFP in MENA region: A firm-level assessment

This paper examines the difference in the productivity of small and large firms in a select group of countries. The countries were chosen from a wide spectrum of development levels. Belgium and Poland are from the ‘North’ and Egypt, Morocco and occupied Palestinian territory (oPt) are developing countries from the ‘South’. The analysis of total factor productivity (TFP) shows that differences in productivity between small- and medium-sized enterprises (SMEs) and large firms depend on the industry and on the country. SMEs tend to be less productive than larger firms within the same industry; it appears also that SMEs in the South tend to exhibit lower levels of productivity than in the North irrespective of the industry. Further analysis of southern countries shows that the following variables are significant in explaining the productivity differences between small and large firms: the age of the firm, the share of exports in a firm’s output, the intensity of competition within an industry and the technological intensity within an industry. The paper concludes with some recommendations for TFP improvement of Southern SMEs.