Impact of the business environment on output and productivity in Africa

El-hadj Bah and Lei Fang

Journal of Development Economics, 2015, vol. 114, issue C, 159-171

Abstract: We develop a general equilibrium model to assess the quantitative effects of the business environment, including regulations, crime, corruption, infrastructure and access to finance, on output and total factor productivity (TFP) in Sub-Saharan Africa. The first four dimensions are modeled as a tax on output and the finance dimension is modeled as a borrowing constraint. The model is simulated for a sample of Sub-Saharan African countries using the country-specific financial development and the country-specific joint distribution between productivity and taxes. We find that the simulated output and TFP are highly correlated with those in the data and the model accounts for 48% of the variation of output in the data. Access to finance alone accounts for 39% and the other four dimensions account for 11% of the dispersion in output.

Keywords: Business environment; Financial development; Productivity misallocation; African development (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (50)

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Related works:
Working Paper: Impact of the business environment on output and productivity in Africa (2011)
Working Paper: Impact of the business environment on output and productivity in Africa (2011)
Working Paper: Impact of the business environment on output and productivity in Africa (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:114:y:2015:i:c:p:159-171

DOI: 10.1016/j.jdeveco.2015.01.001

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