Global Value Chain Participation of Firms in West Africa: Empirical Insights from Ghana and Nigeria

Evans S. Osabuohien, Alhassan Abdul-Wakeel Karakara and Oluwatosin D. Edafe

Working Papers from African Economic Research Consortium

Abstract: Global value chains (GVC) have become an important developmental issue. However, empirical studies on the peculiar nature of the GVC participation of firms are sparse, especially in West Africa. Thus, this study empirically examines the factors that constitute the major drivers of firm GVC participation and the institutional obstacles to firm GVC participation. The study discusses how such factors could be surmounted. We use the logit model as the empirical strategy and the World Bank's Enterprise Survey (ES) database for two biggest West African countries: Ghana and Nigeria. The findings show that firms in West Africa face constraints that militate against their participation in GVC. Also, we find crucial factors that can influence firms participation in GVC, which differ relatively between Ghana and Nigeria. In essence, medium and large-scale firms have higher likelihood to participate in GVC than small-scale firms. Similarly, the legal status of the firm helps in enhancing the firms participation in GVC, as firms that are shareholding or partnership firms are more likely to participate in GVC than sole proprietorship firms. Also, firm location serves as an advantage to the firm GVC participation, as firms in cities with a human population of over one million are more likely to be engaged in GVC. The finding of the study is relevant to industry players and firms, particularly on the mode of participation in GVC and in helping policy makers in creating a favourable policy ambience for GVC participation of firms, which could enhance corporate relations among domestic firms and international players to spur firms productivity and participation in GVC.

Date: 2024-11-27
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Note: African Economic Research Consortium
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