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The Effects of Pollution and Business Environment on Firm Productivity in Africa

Author

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  • Soppelsa,Maria Edisa
  • Lozano Gracia,Nancy
  • Xu,L. Colin

Abstract

This paper explores the links between city competitiveness and air pollution and the business environment. Because competitive cities not only attract more productive firms, but also facilitate their business, the paper look at firm performance as a proxy for city competitiveness. It focuses on African firms, because this region is developing fast and experiencing increasing pollution levels and the effects of agglomeration economies. The analysis finds two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.

Suggested Citation

  • Soppelsa,Maria Edisa & Lozano Gracia,Nancy & Xu,L. Colin, 2019. "The Effects of Pollution and Business Environment on Firm Productivity in Africa," Policy Research Working Paper Series 8834, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8834
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    Cited by:

    1. Cesar Calderon & Albert G. Zeufack & Gerard Kambou & Megumi Kubota & Catalina Cantu Canales & Vijdan Korman, "undated". "Africa's Pulse, No. 22, October 2020," World Bank Publications - Reports 34587, The World Bank Group.
    2. Guo, Liwen & Cheng, Zhiming & Tani, Massimiliano & Cook, Sarah & Zhao, Jiaqi & Chen, Xi, 2025. "Air pollution and entrepreneurship," China Economic Review, Elsevier, vol. 89(C).
    3. Sandra Aguilar-Gomez & Nathaly M. Rivera, 2024. "Air Pollution in the Global South: An Overview of Its Sources and Impacts," Working Papers wp561, University of Chile, Department of Economics.
    4. Phisek Srinamphon & Sainatee Chernbumroong & Korrakot Yaibuathet Tippayawong, 2022. "The Effect of Small Particulate Matter on Tourism and Related SMEs in Chiang Mai, Thailand," Sustainability, MDPI, vol. 14(13), pages 1-9, July.
    5. Silvia Muzi & Filip Jolevski & Kohei Ueda & Domenico Viganola, 2023. "Productivity and firm exit during the COVID-19 crisis: cross-country evidence," Small Business Economics, Springer, vol. 60(4), pages 1719-1760, April.

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