Networks, Communities, and Markets in Sub-Saharan Africa: Implications for Firm Growth and Investment

Marcel Fafchamps ()

Working Papers Series from Centre for the Study of African Economies, University of Oxford

Abstract: This paper examines how relationships and networks affect market exchange in Sub-Saharan Africa. After noting that market exchange aruably plays a larger role in Africa than in developed economies, we show that the presence of transactions costs naturally leads market participants to enter in long-term trading relationships. These relationships form business networks that shape market outcomes. We argue that network segmentation can have large efficiency and equity costs, particularly in international trade. Because of network externalities, groups and countries that are familiar with a particular activity tend to continue investing in that activity. The presence of networks and non-convex transactions costs also complicates the analysis of market competition. Implications for future research are briefly discussed.

Keywords: TRADE; NETWORKS; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: O55 F10 (search for similar items in EconPapers)
Date: 1999
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.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:fth:oxesaf:99-24

Ordering information: This working paper can be ordered from
Publications Office Centre for the Study of African Economies Institute of Economics and Statistics University of Oxford St Cross Building Manor Road Oxford OX1 3UL
http://users.ox.ac.u ... s/workingp/main.html

Access Statistics for this paper

More papers in Working Papers Series from Centre for the Study of African Economies, University of Oxford
Address: Centre for the Study of African Economies Institute of Economics and Statistics University of Oxford St. Cross Building, Manor Road Oxford, OX1 3UL, UK.
Contact information at EDIRC.
Series data maintained by Thomas Krichel ().