The Determinants of Survival among African Manufacturing Firms

Mans M. Soderbom (), Francis John Teal and Alan Harding

Economic Development and Cultural Change, 2006, vol. 54, issue 3, pages 533-55

Abstract: Recent reforms in many African economies of their trading and exchange rate regimes have eliminated much of the protection that previously limited competition. Despite these reforms, African manufacturing firms remain unsuccessful, particularly in international export markets. In this article we focus on the role of total factor productivity (TFP) in determining whether or not firms can survive in the subsequent period. We use a pooled panel data set of firms in Ghana, Kenya, and Tanzania that spans a period of 5 years. We find that productivity influences subsequent firm survival among large, but not small, firms. We investigate whether this result can be explained by differences in risk or the persistence of TFP. We find no evidence that this is the case. The result may be driven by covariance between the unobserved outside option and the value in remaining in existence that makes optimal exiting for small firms largely independent of productivity in the previous period.

View citations in EconPapers

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.journals.uchicago.edu/EDCC/order1.html

Access Statistics for this article

Economic Development and Cultural Change is edited by John Strauss

More articles in Economic Development and Cultural Change from University of Chicago Press
Address: The University of Chicago Press, Journals Division, P.O. Box 37005 Chicago, IL 60637
Series data maintained by Christopher F. Baum ().