Firms’ Locational Choice and Infrastructure Development in Tanzania

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.

Bibliographic Details

Main Authors:	Melibaeva, Sevara, Iimi, Atsushi, Humphreys, Richard Martin
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-06
Subjects:	BUSINESS ACTIVITIES, EMPLOYMENT, VEHICLE OPERATING COSTS, ECONOMIC GROWTH, INFRASTRUCTURE SERVICES, PRODUCTION, AGGLOMERATION EFFECT, MATERIALS, CARGO HANDLING, TRANSPORT INFRASTRUCTURE, GENERATION, EXPORTS, ELASTICITY, INFRASTRUCTURE DEVELOPMENT, POLITICAL ECONOMY, ECONOMIC STRUCTURE, PUBLIC INFRASTRUCTURE, INDUSTRIAL DEVELOPMENT, VARIABLES, LOCAL CONNECTIVITY, HIGHWAY SYSTEM, TAX, INPUTS, REGISTRY, LOCAL GOVERNMENT FINANCE, TRANSPORTATION INFRASTRUCTURE, TRANSPORT ACCESS, DRIVERS, COMPUTER, OPEN ACCESS, TRANSPORT MODES, ECONOMIC ACTIVITY, CHOICE, VEHICLE, DATA, INFLUENCE, TRANSPORT INVESTMENTS, ROAD, INFRASTRUCTURE ACCESS, CARGO, COSTS, ROAD NETWORK, TRANSPORT, INTERSTATE HIGHWAY SYSTEM, INFRASTRUCTURE PROJECT, RENT, CUSTOMS, RAIL LINE, COST OF POWER, GROWTH PATH, PRODUCTIVITY, ECONOMETRICS, EXTERNALITIES, INDUSTRIALIZATION, INCREASING RETURNS, CRITERIA, MARKETS, PRIVATE INVESTMENT, ELECTRICITY SUPPLY, CONNECTIVITY, WEB, ENTERPRISES, RAIL STATIONS, PORTS, NATURAL RESOURCES, ROUTE, ECONOMIC RESEARCH, RESIDENTIAL USERS, INFRASTRUCTURE, INFRASTRUCTURE INVESTMENT, MANUFACTURING, USERS, TECHNOLOGY, ECONOMIC ZONES, TRANSACTION, VALUE ADDED, FIRMS, TRANSPORTATION, MARKET POTENTIAL, WAGES, GLOBAL MARKET, POLICIES, RESULTS, MARKET CONDITIONS, NESTED LOGIT MODEL, VALUE, COMPETITIVENESS, POWER, FOREIGN DIRECT INVESTMENT, ELECTRICITY, ELASTICITIES, CREDIT, PRODUCT DIFFERENTIATION, ACCESSIBILITY, MARKET ACCESSIBILITY, AGRICULTURE, INFRASTRUCTURE DEVELOPMENTS, MEASUREMENT, TRANSACTION COSTS, RAILWAY, HIGHWAYS, GOOD TRANSPORT, ENDOGENOUS VARIABLES, DIVERSIFICATION, TAX REVENUE, ROADS, ADMINISTRATION, INFRASTRUCTURE INVESTMENTS, RESULT, TAXATION, HIGHWAY, TRADE, RAILWAYS, INTERSTATE HIGHWAYS, THEORY, BUSINESSES, BUSINESS, INVESTMENT, NETWORK, AGGLOMERATION ECONOMIES, POSITIVE EXTERNALITIES, RAILROADS, AUTOREGRESSION, PERFORMANCE, RAIL, POLICY SUPPORT, PROFIT, INVESTMENTS, COMMODITIES, ROAD CONDITIONS, ECONOMIC GEOGRAPHY, DATABASE, TRANSPORT COSTS, VEHICLE OPERATING, COMMODITY, INTERNATIONAL MARKETS, AGGLOMERATION, PRICES, AGGLOMERATION EFFECTS, DEVELOPMENT POLICY, HISTORIC CITIES,
Online Access:	http://documents.worldbank.org/curated/en/2015/06/24637459/firms’-locational-choice-infrastructure-development-tanzania-instrumental-variable-spatial-autoregressive-model https://hdl.handle.net/10986/22178
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