Stunted Growth : Why Don't African Firms Create More Jobs?
Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fe...
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| Format: | Policy Research Working Paper |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2013/12/18662376/stunted-growth-don t-african-firms-create-more-jobs http://hdl.handle.net/10986/16943 |
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okr-10986-169432021-04-23T14:03:33Z Stunted Growth : Why Don't African Firms Create More Jobs? Iacovone, Leonardo Ramachandran, Vijaya Schmidt, Martin BUSINESS CLIMATE BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS SECTOR CAPABILITIES CAPITAL FORMATION COMPETITIVENESS COOPERATIVES DEVELOPMENT ECONOMICS DRIVERS ECONOMIC THEORY ECONOMICS ELECTRICITY EMPIRICAL EVIDENCE ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURSHIP ENVIRONMENTS ESP EXPANSION FINANCIAL INSTITUTIONS FIRM SIZE FIRMS GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT REGULATION GROWTH POTENTIAL HIGH TRUST HUMAN CAPITAL INCOMPLETE CONTRACTS INFORMATION SYSTEMS INNOVATION JOB CREATION LABOR COSTS LABOR PRODUCTIVITY LEASING LENDERS LIMITED ACCESS MANUFACTURING MARKET ACCESS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING VALUES MNE NATIONAL INCOME OPEN ACCESS PERFORMANCE MEASURES POLICY ENVIRONMENT POLITICAL ECONOMY PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PROPERTY RIGHTS REGISTRIES RESULT RESULTS RETAINED EARNINGS SIZE OF FIRM SIZE OF FIRMS SMALL BUSINESS SMALL ENTERPRISES SMALL FIRMS SUPPLIERS TERMS OF TRADE THEORETICAL MODELS THEORY OF THE FIRM UNEMPLOYMENT UNSKILLED LABOR UNSKILLED WORKERS USES WEB WORKING CAPITAL Many countries in Africa suffer high rates of underemployment or low rates of productive employment; many also anticipate large numbers of people to enter the workforce in the near future. This paper asks the question: Are African firms creating fewer jobs than those located elsewhere? And, if so, why? One reason may be that weak business environments slow the growth of firms and distort the allocation of resources away from better-performing firms, hence reducing their potential for job creation. The paper uses data from 41,000 firms across 119 countries to examine the drivers of firm growth, with a special focus on African firms. African firms, at any age, tend to be 20-24 percent smaller than firms in other regions of the world. The poor business environment, driven by limited access to finance, and the lack of availability of electricity, land, and unskilled labor have some value in explaining this difference. Foreign ownership, the export status of the firm, and the size of the market are also significant determinants of firm size. However, even after controlling for the business environment and for characteristics of firms and markets, about 60 percent of the size gap between African and non-African firms remains unexplained. 2014-02-05T19:56:15Z 2014-02-05T19:56:15Z 2013-12 http://documents.worldbank.org/curated/en/2013/12/18662376/stunted-growth-don t-african-firms-create-more-jobs http://hdl.handle.net/10986/16943 English en_US Policy Research Working Paper;No. 6727 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa Africa |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
BUSINESS CLIMATE BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS SECTOR CAPABILITIES CAPITAL FORMATION COMPETITIVENESS COOPERATIVES DEVELOPMENT ECONOMICS DRIVERS ECONOMIC THEORY ECONOMICS ELECTRICITY EMPIRICAL EVIDENCE ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURSHIP ENVIRONMENTS ESP EXPANSION FINANCIAL INSTITUTIONS FIRM SIZE FIRMS GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT REGULATION GROWTH POTENTIAL HIGH TRUST HUMAN CAPITAL INCOMPLETE CONTRACTS INFORMATION SYSTEMS INNOVATION JOB CREATION LABOR COSTS LABOR PRODUCTIVITY LEASING LENDERS LIMITED ACCESS MANUFACTURING MARKET ACCESS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING VALUES MNE NATIONAL INCOME OPEN ACCESS PERFORMANCE MEASURES POLICY ENVIRONMENT POLITICAL ECONOMY PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PROPERTY RIGHTS REGISTRIES RESULT RESULTS RETAINED EARNINGS SIZE OF FIRM SIZE OF FIRMS SMALL BUSINESS SMALL ENTERPRISES SMALL FIRMS SUPPLIERS TERMS OF TRADE THEORETICAL MODELS THEORY OF THE FIRM UNEMPLOYMENT UNSKILLED LABOR UNSKILLED WORKERS USES WEB WORKING CAPITAL |
| spellingShingle |
BUSINESS CLIMATE BUSINESS ENVIRONMENT BUSINESS ENVIRONMENTS BUSINESS SECTOR CAPABILITIES CAPITAL FORMATION COMPETITIVENESS COOPERATIVES DEVELOPMENT ECONOMICS DRIVERS ECONOMIC THEORY ECONOMICS ELECTRICITY EMPIRICAL EVIDENCE ENTERPRISE SURVEYS ENTREPRENEUR ENTREPRENEURSHIP ENVIRONMENTS ESP EXPANSION FINANCIAL INSTITUTIONS FIRM SIZE FIRMS GOVERNMENT EXPENDITURES GOVERNMENT POLICY GOVERNMENT REGULATION GROWTH POTENTIAL HIGH TRUST HUMAN CAPITAL INCOMPLETE CONTRACTS INFORMATION SYSTEMS INNOVATION JOB CREATION LABOR COSTS LABOR PRODUCTIVITY LEASING LENDERS LIMITED ACCESS MANUFACTURING MARKET ACCESS MICROFINANCE MICROFINANCE INSTITUTIONS MISSING VALUES MNE NATIONAL INCOME OPEN ACCESS PERFORMANCE MEASURES POLICY ENVIRONMENT POLITICAL ECONOMY PRIVATE SECTOR PRIVATE SECTOR DEVELOPMENT PROPERTY RIGHTS REGISTRIES RESULT RESULTS RETAINED EARNINGS SIZE OF FIRM SIZE OF FIRMS SMALL BUSINESS SMALL ENTERPRISES SMALL FIRMS SUPPLIERS TERMS OF TRADE THEORETICAL MODELS THEORY OF THE FIRM UNEMPLOYMENT UNSKILLED LABOR UNSKILLED WORKERS USES WEB WORKING CAPITAL Iacovone, Leonardo Ramachandran, Vijaya Schmidt, Martin Stunted Growth : Why Don't African Firms Create More Jobs? |
| geographic_facet |
Africa Africa |
| relation |
Policy Research Working Paper;No. 6727 |
| description |
Many countries in Africa suffer high
rates of underemployment or low rates of productive
employment; many also anticipate large numbers of people to
enter the workforce in the near future. This paper asks the
question: Are African firms creating fewer jobs than those
located elsewhere? And, if so, why? One reason may be that
weak business environments slow the growth of firms and
distort the allocation of resources away from
better-performing firms, hence reducing their potential for
job creation. The paper uses data from 41,000 firms across
119 countries to examine the drivers of firm growth, with a
special focus on African firms. African firms, at any age,
tend to be 20-24 percent smaller than firms in other regions
of the world. The poor business environment, driven by
limited access to finance, and the lack of availability of
electricity, land, and unskilled labor have some value in
explaining this difference. Foreign ownership, the export
status of the firm, and the size of the market are also
significant determinants of firm size. However, even after
controlling for the business environment and for
characteristics of firms and markets, about 60 percent of
the size gap between African and non-African firms remains unexplained. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Iacovone, Leonardo Ramachandran, Vijaya Schmidt, Martin |
| author_facet |
Iacovone, Leonardo Ramachandran, Vijaya Schmidt, Martin |
| author_sort |
Iacovone, Leonardo |
| title |
Stunted Growth : Why Don't African Firms Create More Jobs? |
| title_short |
Stunted Growth : Why Don't African Firms Create More Jobs? |
| title_full |
Stunted Growth : Why Don't African Firms Create More Jobs? |
| title_fullStr |
Stunted Growth : Why Don't African Firms Create More Jobs? |
| title_full_unstemmed |
Stunted Growth : Why Don't African Firms Create More Jobs? |
| title_sort |
stunted growth : why don't african firms create more jobs? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2013/12/18662376/stunted-growth-don t-african-firms-create-more-jobs http://hdl.handle.net/10986/16943 |
| _version_ |
1764435007207636992 |