Firm productivity and infrastructure costs in east Africa

Atsushi Iimi, Richard Martin Humphrey and Sevara Melibaeva

No 7278, Policy Research Working Paper Series from The World Bank

Abstract: 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.

Keywords: Transport Economics Policy&Planning; E-Business; Energy Production and Transportation; Economic Theory&Research; Infrastructure Economics (search for similar items in EconPapers)
Date: 2015-05-29
New Economics Papers: this item is included in nep-eff, nep-ene, nep-geo and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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