The Effects of Pollution and Business Environment on Firm Productivity in Africa

Maria E. Soppelsa, Nancy Lozano-Gracia and Lixin Xu

International Regional Science Review, 2021, vol. 44, issue 2, 203-228

Abstract: In this article, we explore the links between city competitiveness and air pollution and business environment. Because competitive cities not only attract more productive firms but also facilitate their business, we choose to look at firm performance as a proxy for city competitiveness. We particularly focus on African firms because this region is developing fast, experiencing increasing pollution levels and the effects of agglomeration economies. We find two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.

Keywords: air pollution; Africa; business environment; other urban and regional issues; urban and regional issues; policy and applications; environment; natural resources (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:inrsre:v:44:y:2021:i:2:p:203-228

DOI: 10.1177/0160017620931572

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