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 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.
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Bibliographic Details
Main Authors: |
Ramachandran, Vijaya,
Iacovone, Leonardo,
Schmidt, Martin |
Language: | English en_US |
Published: |
World Bank, Washington, DC
2013-12
|
Subjects: | 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, |
Online Access: | http://documents.worldbank.org/curated/en/2013/12/18662376/stunted-growth-don t-african-firms-create-more-jobs
https://hdl.handle.net/10986/16943
|
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