Explaining Africa’s (Dis)advantage : The Curse of Party Monopoly
Africa's economic performance has been widely viewed with pessimism. This paper uses firm-level data for 89 countries to examine formal firm performance. Without controls, manufacturing African firms do not perform much worse than firms in oth...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17172552/explaining-africas-disadvantage-curse-party-monopoly http://hdl.handle.net/10986/12177 |
| Summary: | Africa's economic performance has
been widely viewed with pessimism. This paper uses
firm-level data for 89 countries to examine formal firm
performance. Without controls, manufacturing African firms
do not perform much worse than firms in other regions. But
they do have structural problems, exhibiting much lower
export intensity and investment rates. Once the analysis
controls for geography and the political and business
environment, formal African firms robustly lead in sales
growth, total factor productivity levels and productivity
growth. Africa's conditional advantage is higher in
low-tech than in high-tech manufacturing, and exists in
manufacturing but not in services. While geography,
infrastructure, and access to finance play an important role
in explaining Africa's disadvantage in firm
performance, the key factor is party monopoly. The longer a
single political party remains in power, the lower are firm
productivity levels, growth rates, and sales growth for
manufacturing. In contrast, the business environment and
firm characteristics (except for foreign investment) do not
matter as much. The paper also finds evidence that the
effects of the political and business environment are
heterogeneous across sectors and firms of various levels of technology. |
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