Firms Far Up! Productivity, Agglomeration and High-Growth Firms in Ethiopia
High-growth firms have been widely studied in advanced countries, but little is known about such stellar performers in Africa. Using establishment-level data from Ethiopia, this paper finds that the incidence of high-growth firms stands at an avera...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/600161577764526811/Firms-Far-Up-Productivity-Agglomeration-and-High-Growth-Firms-in-Ethiopia http://hdl.handle.net/10986/33119 |
| Summary: | High-growth firms have been widely
studied in advanced countries, but little is known about
such stellar performers in Africa. Using establishment-level
data from Ethiopia, this paper finds that the incidence of
high-growth firms stands at an average of 7 percent, a
figure comparable to that of advanced countries. High-growth
episodes are short-lived, and the likelihood of survival or
a subsequent episode is not any higher for high-growth
firms. It is difficult for firms to sustain high growth, and
the likelihood of a repeated episode is low. There is only a
6.5 percent chance that a manufacturing plant in Ethiopia
will repeat a high-growth event in the subsequent three-year
period. This likelihood is not greater than that of plants
that did not experience high growth in the previous period.
The paper explores the drivers of high growth and finds a
tight link between exemplary performance and initial plant
productivity, which is robust to many controls, including
plant location. Plants located in Ethiopia's capital
city or agglomerations have a higher probability of high
growth. And high growth in plant employment is found to be
self-reinforcing, that is, past high-growth experience is
positively and significantly associated with subsequent
growth in firm productivity. |
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