IDEAS home Printed from
   My bibliography  Save this paper

Taxing the good ? distortions, misallocation, and productivity in Sub-Saharan Africa


  • Cirera,Xavier
  • Fattal Jaef,Roberto N.
  • Maemir,Hibret Belete
  • Cirera,Xavier
  • Fattal Jaef,Roberto N.
  • Maemir,Hibret Belete


This paper uses comprehensive and comparable firm-level manufacturing census data from four Sub-Saharan African countries to examine the extent, costs, and nature of within-industry resource misallocation across heterogeneous firms. The paper finds evidence of severe misallocation in which resources are diverted away from high-productivity firms toward low-productivity ones in all four countries, although the magnitude differs across countries. The paper shows that a hypothetical reallocation of resources that equalizes marginal returns across firms would increase manufacturing productivity by 31.4 percent in Cote d'Ivoire and as much as 162.7 percent in Kenya. The paper emphasizes the importance of the quality of the underlying data, by comparing the results against those from the World Bank Enterprise Surveys. The comparison finds that the survey-based results underestimate the extent of misallocation vis-a-vis the census. Finally, the paper finds that the size of existing distortions is correlated with various measures of business environment, such as lack of access to finance, corruption, and regulations.

Suggested Citation

  • Cirera,Xavier & Fattal Jaef,Roberto N. & Maemir,Hibret Belete & Cirera,Xavier & Fattal Jaef,Roberto N. & Maemir,Hibret Belete, 2017. "Taxing the good ? distortions, misallocation, and productivity in Sub-Saharan Africa," Policy Research Working Paper Series 7949, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7949

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Jose Maria Da-Rocha & Marina Mendes Tavares & Diego Restuccia, 2014. "Policy Distortions and Aggregate Productivity with Endogenous Establishment-Level Productivity," Working Papers tecipa-523, University of Toronto, Department of Economics.
    2. Diego Restuccia, 2019. "Misallocation and aggregate productivity across time and space," Canadian Journal of Economics, Canadian Economics Association, vol. 52(1), pages 5-32, February.
    3. World Bank Group, "undated". "Africa's Pulse, No. 18, October 2018," World Bank Other Operational Studies 30455, The World Bank.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:7949. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.