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Firms? locational choice and infrastructure development in Rwanda

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  • Iimi,Atsushi
  • Humphrey,Richard Martin
  • Melibaeva,Sevara

Abstract

Agglomeration economies are among the most important factors to increase firm productivity. However, there is little evidence supportive of this in Africa. By applying the conditional and nested logit models, this paper examines the relationship between firm locations and infrastructure accessibility in Rwanda. It is found that agglomeration economies matter to even one of the smallest countries in Africa. It is also found that infrastructure availability has an important role in affecting the firm location decision. Electricity access and transport connectivity to the domestic and international markets are found to be important to attract new investment. In addition, the quality of local labor supplied, measured by educational attainment, is found as an important determinant of firm location, while the effect of labor costs remains inconclusive.

Suggested Citation

  • Iimi,Atsushi & Humphrey,Richard Martin & Melibaeva,Sevara, 2015. "Firms? locational choice and infrastructure development in Rwanda," Policy Research Working Paper Series 7279, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7279
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    1. Liliana Avelar-Sosa & Jorge L. García-Alcaraz & José M. Mejía-Muñoz & Aidé A. Maldonado-Macías & Giner Alor Hernández, 2018. "Government Support and Market Proximity: Exploring Their Relationship with Supply Chain Agility and Financial performance," Sustainability, MDPI, vol. 10(7), pages 1-20, July.

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    Keywords

    Transport Economics Policy&Planning; E-Business; Economic Theory&Research; Private Participation in Infrastructure; Microfinance;
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