Firm Heterogeneity and Market Selection in Sub-Saharan Africa: Does It Spur Industrial Progress?Economic Development and Cultural Change, 2007, vol. 55, issue 2, pages 393-423 Abstract: This article investigates the processes of market selection and industry dynamics in a sub-Saharan Africa context. Using census-based longitudinal data, it examines the distribution of productivity within an industry to determine whether patterns of firm entry, exit, and survival are driven by underlying efficiency differences. It also estimates the contributions to industry-level productivity growth of producer turnover and the reallocation of resources from less efficient producers to more efficient ones. The article shows that markets in sub-Saharan Africa, as represented by Ethiopia, are at least as strong as those in other regions in selecting efficient firms. Tolerance of inefficient firms also declines with the degree of exposure to international competition. While reallocation of resources played a positive and significant role for industry-level productivity growth, it only managed to offset the declining trend in intrafirm productivity. The article concludes that although markets have played the expected disciplinary role, long-term industrial growth requires more than functional markets, particularly in addressing firm-level innovation. There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Ordering information: This journal article can be ordered from 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 |
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