Firm Productivity and Infrastructure Costs in East Africa

Infrastructure is an important driving force for economic growth. It reduces trade and transaction costs and stimulates the productivity of the economy. Africa has been lagging behind in the global manufacturing market. Among others, infrastructure is an important constraint in many African countries. Using firm-level data for East Africa, the paper reexamines the relationship between firm performance and infrastructure. It is shown that labor costs are by far the most important to stimulate firm production. Among the infrastructure sectors, electricity costs have the highest output elasticity, followed by transport costs. In addition, the paper shows that the quality of infrastructure is important to increase firm production. In particular, quality transport infrastructure seems to be essential. The paper also finds that agglomeration economies can reduce firm costs. The agglomeration elasticity is estimated at 0.03–0.04.

Bibliographic Details

Main Authors:	Iimi, Atsushi, Humphrey, Richard Martin, Melibaeva, Sevara
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-06
Subjects:	TARIFFS, VEHICLE OPERATING COSTS, WATER SERVICES, TRANSPORT SECTOR, EQUIPMENT, ECONOMIC GROWTH, INFRASTRUCTURE SERVICES, PRODUCTION, PRICE ELASTICITY OF DEMAND, TRANSPORT INFRASTRUCTURE, GENERATION, ELASTICITY OF DEMAND, QUALITY OF TRANSPORT, ELASTICITY, PRODUCTION INCREASES, INFRASTRUCTURE DEVELOPMENT, POLITICAL ECONOMY, PUBLIC INFRASTRUCTURE, VARIABLES, ROAD INFRASTRUCTURE, COMPUTER PROGRAM, PRICE, INPUTS, RETURNS TO SCALE, GENERATORS, COMPUTER, HIGHWAY INVESTMENT, OPEN ACCESS, TRANSPORT MODES, COMMUNICATIONS, MATHEMATICAL ECONOMICS, INSTITUTIONS, VEHICLE, GENERATION CAPACITY, DATA, INTERNATIONAL BUSINESSES, ROAD, COSTS, TRANSPORT, ECONOMETRICS, PRODUCTIVITY, EXTERNALITIES, HIGHWAY CONGESTION, INDUSTRIALIZATION, FAILURES, FINANCIAL INSTITUTIONS, BUSINESS SERVICES, ELECTRICITY SUPPLY, WEB, ASSET REPLACEMENT, TOTAL COSTS, MATERIAL, PRICE ELASTICITY, PORTS, INVENTORY, ECONOMIC RESEARCH, PRODUCTION INPUTS, TELEPHONE, INFRASTRUCTURE, INFRASTRUCTURE INVESTMENT, MANUFACTURING, TECHNOLOGY, TRANSACTION, CONGESTION, DRIVING, TRANSPORTATION, WAGES, INTERNATIONAL TRADE, ELECTRIC POWER, INFRASTRUCTURE COSTS, PRICE ELASTICITIES, RESULTS, COMPETITIVENESS, POWER, FACTOR DEMAND, ELECTRICITY, PRODUCTION FUNCTIONS, ELASTICITIES, LOCALIZATION, INEFFICIENCY, ELECTRICITY GENERATION, AGRICULTURE, DAYS OF INVENTORY, MEASUREMENT, TRANSACTION COSTS, ECONOMIC ORDER, HIGHWAYS, PRODUCTION FUNCTION, HIGHWAY INFRASTRUCTURE, ROADS, COMPARATIVE ECONOMICS, INFRASTRUCTURE INVESTMENTS, RESULT, HIGHWAY, TRADE, ICT, GDP, GOODS, THEORY, BACK-UP, ECONOMIES OF SCALE, BUSINESSES, BUSINESS, NETWORK, AGGLOMERATION ECONOMIES, POSITIVE EXTERNALITIES, INTERNATIONAL ENERGY, PERFORMANCE, BUSINESS ENVIRONMENT, FUEL, INVESTMENTS, COMMUNICATION, WATER INFRASTRUCTURE, DATABASE, TRANSPORT COSTS, PROFITS, RENTAL FEES, ROAD TRANSPORT, VEHICLE OPERATING, COMMODITY, POSITIVE EFFECTS, FUEL COST, FREIGHT, AGGLOMERATION, PRICES, USES, AGGLOMERATION EFFECTS, PRODUCTION COSTS, DEVELOPMENT POLICY,
Online Access:	http://documents.worldbank.org/curated/en/2015/06/24570547/firm-productivity-infrastructure-costs-east-africa http://hdl.handle.net/10986/22152
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