Services Inputs and Firm Productivity in Sub-Saharan Africa: Evidence from Firm-Level Data

This paper investigates the relationship between the productivity of African manufacturing firms and their access to services inputs. We use data from the World Bank Enterprise Survey for over 1,000 firms in ten Sub-Saharan African countries to calculate the total factor productivity of firms. The E...

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Bibliographic Details
Published in:Journal of African economies 2008-08, Vol.17 (4), p.578-599
Main Authors: Arnold, Jens Matthias, Mattoo, Aaditya, Narciso, Gaia
Format: Article
Language:English
Subjects:
Banking
Communication
D24
Developing countries
Economic activity
Economic analysis
Economic growth
Economic performance
Electricity
Enterprises
Financial services
LDCs
Liberalization
Manufacturing
Poverty
Production functions
Productivity
Regional disparities
Studies
Sub-Saharan Africa
Total factor productivity
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Summary:This paper investigates the relationship between the productivity of African manufacturing firms and their access to services inputs. We use data from the World Bank Enterprise Survey for over 1,000 firms in ten Sub-Saharan African countries to calculate the total factor productivity of firms. The Enterprise Surveys also contain unique measures of firms' access to communications, electricity and financial services. The availability of these measures at the firm level, both as subjective and objective indicators, allows us to exploit the variation in services performance at the sub-national regional level. Furthermore, by using the regional variation in services performance, we are also able to address concerns about the possible endogeneity of the services variables. Our results show a significant and positive relationship between firm productivity and service performance in all three services sectors analysed. The paper thus provides support for the argument that improvements in services industries contribute to enhancing the performance of downstream economic activities, and thus are an essential element of a strategy for promoting growth and reducing poverty.
ISSN:0963-8024
1464-3723
DOI:10.1093/jae/ejm042