Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa

This paper uses comprehensive and comparable firm-level manufacturing censuses from four Sub-Saharan African (SSA) countries to examine the extent, costs, and nature of within-industry resource misallocation between heterogeneous production units. This paper finds evidence of severe misallocation in...

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Main Authors: Cirera, Xavier, Fattal-Jaef, Roberto, Maemir, Hibret
Format: Journal Article
Published: Published by Oxford University Press on behalf of the World Bank 2021
Subjects:
Online Access:http://hdl.handle.net/10986/36072
id okr-10986-36072
recordtype oai_dc
spelling okr-10986-360722021-08-07T05:10:29Z Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa Cirera, Xavier Fattal-Jaef, Roberto Maemir, Hibret DISTORTIONS MISALLOCATION TOTAL FACTOR PRODUCTIVITY ENTERPRISE SURVEY RESOURCE ALLOCATION MANUFACTURING CENSUS This paper uses comprehensive and comparable firm-level manufacturing censuses from four Sub-Saharan African (SSA) countries to examine the extent, costs, and nature of within-industry resource misallocation between heterogeneous production units. This paper finds evidence of severe misallocation in which resources are diverted away from high-productivity firms towards low-productivity ones, although the magnitude differs across countries. Estimated aggregate productivity gains from the hypothetical equalization of marginal returns range from 30 percent in Côte d’Ivoire to 160 percent in Kenya. The magnitude of reallocation gains appears considerably lower when performing the same counterfactual exercise based on the World Bank Enterprise Surveys once the value-added shares of industries are adjusted using the census data. This suggests that linking firm-level survey data to aggregate outcomes requires census-type data or sampling methods that take the true structure of production into account. 2021-08-06T16:59:12Z 2021-08-06T16:59:12Z 2020-02 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/36072 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Published by Oxford University Press on behalf of the World Bank Publications & Research Publications & Research :: Journal Article Africa Sub-Saharan Africa
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
topic DISTORTIONS
MISALLOCATION
TOTAL FACTOR PRODUCTIVITY
ENTERPRISE SURVEY
RESOURCE ALLOCATION
MANUFACTURING CENSUS
spellingShingle DISTORTIONS
MISALLOCATION
TOTAL FACTOR PRODUCTIVITY
ENTERPRISE SURVEY
RESOURCE ALLOCATION
MANUFACTURING CENSUS
Cirera, Xavier
Fattal-Jaef, Roberto
Maemir, Hibret
Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa
geographic_facet Africa
Sub-Saharan Africa
description This paper uses comprehensive and comparable firm-level manufacturing censuses from four Sub-Saharan African (SSA) countries to examine the extent, costs, and nature of within-industry resource misallocation between heterogeneous production units. This paper finds evidence of severe misallocation in which resources are diverted away from high-productivity firms towards low-productivity ones, although the magnitude differs across countries. Estimated aggregate productivity gains from the hypothetical equalization of marginal returns range from 30 percent in Côte d’Ivoire to 160 percent in Kenya. The magnitude of reallocation gains appears considerably lower when performing the same counterfactual exercise based on the World Bank Enterprise Surveys once the value-added shares of industries are adjusted using the census data. This suggests that linking firm-level survey data to aggregate outcomes requires census-type data or sampling methods that take the true structure of production into account.
format Journal Article
author Cirera, Xavier
Fattal-Jaef, Roberto
Maemir, Hibret
author_facet Cirera, Xavier
Fattal-Jaef, Roberto
Maemir, Hibret
author_sort Cirera, Xavier
title Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa
title_short Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa
title_full Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa
title_fullStr Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa
title_full_unstemmed Taxing the Good? Distortions, Misallocation, and Productivity in Sub-Saharan Africa
title_sort taxing the good? distortions, misallocation, and productivity in sub-saharan africa
publisher Published by Oxford University Press on behalf of the World Bank
publishDate 2021
url http://hdl.handle.net/10986/36072
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