Finding Obstacles to Growth: Is Infrastructure a Binding Constraint on African Light-Manufacturing Firms?

Stefan Reppen
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Stefan Reppen: Department of Economic History, Stockholm University, Stockholm, Sweden

International Journal of Economics and Financial Issues, 2015, vol. 5, issue 3, 820-832

Abstract: For African countries to develop and reduce poverty, it is necessary to create productive jobs and industrialise - which can happen through the light manufacturing sector. For such firms to grow, however, a good business environment is necessary. Thus, this paper analyses whether infrastructure puts a binding constraint on light-manufacturing firms in 8 African countries, and thus comprise a real bottleneck for development. The results indicate that there indeed exists a real bottleneck because of insufficient infrastructure for light manufacturing firms in general. However, there does not seem to be any significant difference between different sub sectors within the light-manufacturing sector. These findings indicate that, even at current levels of productivity, a relaxation of the constraints (i.e., improvements in the infrastructure supply) would significantly increase the economic activity, even without improvements in other areas of the business environment.

Keywords: Africa; Infrastructure; Light Manufacturing (search for similar items in EconPapers)
JEL-codes: L6 O14 (search for similar items in EconPapers)
Date: 2015
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