Firm Productivity and Infrastructure Costs in East Africa
Infrastructure is an important driving force for economic growth. It reduces trade and transaction costs and stimulates the productivity of the economy. Africa has been lagging behind in the global manufacturing market. Among others, infrastructure...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24570547/firm-productivity-infrastructure-costs-east-africa http://hdl.handle.net/10986/22152 |
| Summary: | Infrastructure is an important driving
force for economic growth. It reduces trade and transaction
costs and stimulates the productivity of the economy. Africa
has been lagging behind in the global manufacturing market.
Among others, infrastructure is an important constraint in
many African countries. Using firm-level data for East
Africa, the paper reexamines the relationship between firm
performance and infrastructure. It is shown that labor costs
are by far the most important to stimulate firm production.
Among the infrastructure sectors, electricity costs have the
highest output elasticity, followed by transport costs. In
addition, the paper shows that the quality of infrastructure
is important to increase firm production. In particular,
quality transport infrastructure seems to be essential. The
paper also finds that agglomeration economies can reduce
firm costs. The agglomeration elasticity is estimated at 0.03–0.04. |
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