Working Paper 328 - The Cost of Inaction: Obstacles and Lost Jobs in Africa

Andinet Woldemichael and Margaret Joldowski ()
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Margaret Joldowski: Charles H. Dyson School of Applied Economics and Management, Cornell University, https://dyson.cornell.edu

Working Paper Series from African Development Bank

Abstract: In a competitive market, the constant “churning” of firms into and out of business boosts productivity, economic growth, and net job creation. Without competitive markets, however, firm exit, and the failures of firm entry could be due to obstacles other than competition and innovation. In African countries, incumbent firms and potential entrants face immense obstacles: a difficult political environment, burdensome business regulations, inadequate infrastructure, and limited access to finance. This report investigates the extent to which such obstacles hinder job creation in general and firm dynamism, particularly. Using World Bank Enterprise Survey (ES) panel data that covers 18 African countries, the report quantifies the number of jobs lost due to obstacles. It finds that a single obstacle reduces annual employment growth by 0.1–0.34 percentage point. Hence, by removing key business obstacles, Africa could boost new job creation and save many existing high-quality jobs. JEL Classification: D22; L11; L25; O43; J23

Keywords: Unemployment, labor demand, constraints, firm dynamism; doing business (search for similar items in EconPapers)
Date: 2019-12-31
New Economics Papers: this item is included in nep-ent, nep-fdg and nep-sbm
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