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Network proximity and business practices in African Manufacturing

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  • Fafchamps, Marcel
  • Soderbom, Mans

Abstract

Patterns of correlation in innovation and contractual practices among manufacturing firms in Ethiopia and Sudan are documented. Network data that indicate whether any two firms in the utilized sample do business with each other, buy inputs from a common supplier, or sell output to a common client are used for the analysis. Only limited support is found for the commonly held idea that firms that are more proximate in a network sense are more likely to adopt similar practices. Indeed, for certain practices, adoption decisions appear to be local strategic substitutes: if one firm in a given location uses a certain practice, nearby firms are less likely to do so. These results suggest that the diffusion of technology and new business practices may play a more limited role in spurring growth in Africa's manufacturing sector than is often assumed in the present policy discussion.

Suggested Citation

  • Fafchamps, Marcel & Soderbom, Mans, 2013. "Network proximity and business practices in African Manufacturing," Policy Research Working Paper Series 6474, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6474
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    Cited by:

    1. J. Muzurura, 2019. "Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size," The Economics and Finance Letters, Conscientia Beam, vol. 6(1), pages 9-24.
    2. Marcel Fafchamps & Simon Quinn, 2018. "Networks and Manufacturing Firms in Africa: Results from a Randomized Field Experiment," The World Bank Economic Review, World Bank, vol. 32(3), pages 656-675.
    3. Eric Strobl & Marie-Anne Valfort, 2015. "The Effect of Weather-Induced Internal Migration on Local Labor Markets. Evidence from Uganda," The World Bank Economic Review, World Bank, vol. 29(2), pages 385-412.
    4. repec:ipg:wpaper:2014-460 is not listed on IDEAS
    5. Mattea Stein, 2021. "Know-how and Know-who: Effects of a Randomized Training on Network Changes Among Small Urban Entrepreneurs," CSEF Working Papers 622, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. Eyerusalem Siba & Måns Söderbom & Arne Bigsten & Mulu Gebreeyesus, 2020. "The relationship among enterprise clustering, prices, and productivity in Ethiopia’s manufacturing sector," Review of Development Economics, Wiley Blackwell, vol. 24(3), pages 831-854, August.
    7. 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.
    8. Beck, Ulrik & Bjerge, Benedikte, 2017. "Pro-poor Land Transfers and the Importance of Land Abundance and Ethnicity in The Gambia," World Development, Elsevier, vol. 99(C), pages 122-140.
    9. Comola, Margherita & Inguaggiato, Carla & Mendola, Mariapia, 2024. "Social networks and economic transformation: Evidence from a resettled village in Brazil," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 17-34.
    10. Marcel Fafchamps & Måns Söderbom & Monique van den Boogart, 2022. "Adoption with Social Learning and Network Externalities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(6), pages 1259-1282, December.
    11. Sokty Chhair & Carol Newman, 2014. "Clustering, Competition, and Spillover Effects: Evidence from Cambodia," WIDER Working Paper Series wp-2014-065, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

    E-Business; Microfinance; Small Scale Enterprise; Labor Policies; Technology Industry;
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