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Enterprise Agglomeration, Output Prices, and Physical Productivity: Firm-Level Evidence from Ethiopia

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  • Bigsten, Arne
  • Gebreeyesus, Mulu
  • Siba, Eyerusalem
  • Soderbom, Måns

Abstract

We use census panel data on Ethiopian manufacturing firms to analyze the connections between enterprise agglomeration, firm-level output prices and physical productivity. We find a negative and statistically significant relationship between the agglomeration of firms that produce a given product in a given location and the price of that product in the location. We further find a positive and statistically significant relationship between the agglomeration of firms that produce a given product in a location and the physical productivity of firms in the same location producing that product. These results are consistent with the notion that agglomeration generates higher competitive pressure and positive externalities. The net effect of agglomeration of own-product firms on firm-level revenues is close to zero, suggesting that firms do not have strong incentives to agglomerate endogenously. Across firms that produce different products, we find no statistically significant relationship between agglomeration and firm-level output prices and productivity.

Suggested Citation

  • Bigsten, Arne & Gebreeyesus, Mulu & Siba, Eyerusalem & Soderbom, Måns, 2012. "Enterprise Agglomeration, Output Prices, and Physical Productivity: Firm-Level Evidence from Ethiopia," WIDER Working Paper Series 085, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2012-085
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Marco Sanfilippo & Adnan Seric, 2016. "Spillovers from agglomerations and inward FDI: a multilevel analysis on sub-Saharan African firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 147-176, February.
    2. Carol Newman & John Page, 2017. "Industrial clusters: The case for Special Economic Zones in Africa," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    3. Wim Naudé, 2016. "Entrepreneurship and the Reallocation of African Farmers," Agrekon, Taylor & Francis Journals, vol. 55(1-2), pages 1-33, June.
    4. Howard, Emma & Newman, Carol & Rand, John & Tarp, Finn, 2014. "Productivity-enhancing manufacturing clusters: Evidence from Vietnam," WIDER Working Paper Series 071, World Institute for Development Economic Research (UNU-WIDER).
    5. Marco Sanfilippo & Adnan Seric, 2014. "Spillovers from agglomerations and inward FDI. A Multilevel Analysis on SSA domestic firms," RSCAS Working Papers 2014/76, European University Institute.
    6. repec:spr:manint:v:58:y:2018:i:6:d:10.1007_s11575-018-0361-3 is not listed on IDEAS
    7. Emma Howard & Carol Newman & Finn Tarp, 2016. "Measuring industry coagglomeration and identifying the driving forces," Journal of Economic Geography, Oxford University Press, vol. 16(5), pages 1055-1078.

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