Firms’ Locational Choice and Infrastructure Development in Tanzania : Instrumental Variable Spatial Autoregressive Model
Agglomeration economies are among the most important factors in increasing firm productivity. However, there is little evidence supportive of this in Africa. Using the firm registry database in Tanzania, this paper examines a new application of the...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/06/24637459/firms’-locational-choice-infrastructure-development-tanzania-instrumental-variable-spatial-autoregressive-model http://hdl.handle.net/10986/22178 |
| Summary: | Agglomeration economies are among the
most important factors in increasing firm productivity.
However, there is little evidence supportive of this in
Africa. Using the firm registry database in Tanzania, this
paper examines a new application of the logit approach with
two empirical issues taken into account: spatial
autocorrelation and endogeneity of infrastructure placement.
The paper finds significant agglomeration economies. It is
also found that firms are more likely to be located where
local connectivity and access to markets are good. The paper
finds that dealing with infrastructure endogeneity and
spatial autocorrelation in the empirical model is important.
According to the exogeneity test, infrastructure variables
are likely endogenous. The spatial autoregressive term is
significant. As expected, therefore, there are positive
externalities of firm location choice around the neighboring areas. |
|---|