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What drives productivity in Tanzanian manufacturing firms: technology or institutions?

Author

Listed:
  • Goedhuys, Micheline

    (UNU-MERIT)

  • Janz, Norbert

    (UNU-MERIT)

  • Mohnen, Pierre

    (UNU-MERIT)

Abstract

Using the rich micro data set of the World Bank Investment Climate Survey, this paper examines the determinants of productivity among manufacturing firms in the context of a least developed country, Tanzania. In particular it seeks to evaluate the importance of technological variables - such as R&D, education and training, innovation, foreign ownership, licensing and ISO certification - and institutional variables – such as access to credit, health of the workforce, regulation and business support services. Among the technological variables, R&D, and innovations in the form of new products or processes fail to produce any significant impact, and only foreign ownership, ISO certification and high education of the management appear to affect productivity. Some of the institutional variables on the contrary are highly significant and robust to different specifications of the model. As such, formal credit constraints, administrative burdens related to regulations and a lack of business support services seem to depress productivity, while membership of a business association produces the opposite effect. The results of a quantile regression further indicate that the educational level of the managers and access to formal credit are significant for the less productive firms only, whereas for the more productive firms it is having an ISO certification or being a member of a business association that are the significant determinants.

Suggested Citation

  • Goedhuys, Micheline & Janz, Norbert & Mohnen, Pierre, 2006. "What drives productivity in Tanzanian manufacturing firms: technology or institutions?," MERIT Working Papers 2006-037, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2006037
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    References listed on IDEAS

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    Cited by:

    1. Szirmai A. & Gebreeyesus M. & Guadagno F. & Verspagen B., 2013. "Promoting productive employment in Sub‐Saharan Africa : a review of the literature," MERIT Working Papers 2013-062, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Nidhiya Menon, 2015. "Gender And Technology Use In Developing Countries: Evidence From Firms In Kenya," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(3), pages 105-140, September.
    3. Pål Børing, 2014. "The Impact Of Manufacturing Firms’ Use Of Academic Workers On Their Productivity Level," Bulletin of Economic Research, Wiley Blackwell, vol. 66(2), pages 156-172, April.
    4. Nidhiya Menon, 2010. "Got Technology? The Impact of Computers and Cell-phones on Productivity in a Difficult Business Climate: Evidence from Firms with Female Owners in Kenya," Working Papers 21, Brandeis University, Department of Economics and International Business School.
    5. Goedhuys, Micheline, 2007. "The impact of innovation activities on productivity and firm growth: evidence from Brazil," MERIT Working Papers 2007-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Micheline Goedhuys & Leo Sleuwaegen, 2010. "High-growth entrepreneurial firms in Africa: a quantile regression approach," Small Business Economics, Springer, vol. 34(1), pages 31-51, January.
    7. Micheline Goedhuys & Norbert Janz & Pierre Mohnen, 2014. "Knowledge-based productivity in "low-tech" industries: evidence from firms in developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 23(1), pages 1-23, February.
    8. Adamu Jibir & Musa Abdu & Abdullahi Buba, 2023. "Does Human Capital Influence Labor Productivity? Evidence from Nigerian Manufacturing and Service Firms," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 805-830, June.

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    Keywords

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    JEL classification:

    • 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
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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