HAS LOW PRODUCTIVITY CONSTRAINED THE COMPETITIVENESS OF AFRICAN FIRMS? A COMPARISON OF KENYAN AND BANGLADESHI GARMENT FIRMS

Takahiro Fukunishi

The Developing Economies, 2009, vol. 47, issue 3, 307-339

Abstract: It has been argued that poor productivity performance is one of the critical causes of stagnation in the African manufacturing sector, but firm‐level empirical support is limited. Using original firm data from the garment industry, Kenyan and Bangladeshi firms were compared in terms of their technical efficiency and their contribution to competitiveness represented by unit costs. Our estimates indicate that there is no significant gap in the average technical efficiency of the two industries, although unit costs differ greatly between them. Higher unit costs in Kenyan firms mainly stem from high labor costs, while the impact of inefficiency is quite small. Productivity has little correlation with the stagnation of the garment industry in Kenya.

Date: 2009
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