Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence
Hoang Thanh Mai Nguyen and
No 201717, Working Papers from CERDI
Drawing on the World Bank Enterprise Surveys (WBES), we revisit the link between investment climate and firm productive performance for a panel of enterprises surveyed twice in 70 developing countries and 11 manufacturing industries. We take advantage of the surveys done at different times in an increasing number of economies, to tackle the endogeneity issue which has been seen as a problem in previous studies. We also use pertinent econometric techniques to address other biases inherent in the data, in particular measurement errors, missing observations, and multicollinearity. Our results reinforce previous findings by validating, with a larger than usual sample of countries and industries, the importance of a larger set of environment variables. We show that infrastructure quality (Infra), information and communication technologies (ICT), skills and experience of the labor force (H), cost of and access to financing (Fin), security and political stability (CrimePol), competition (Comp) and government relation (Gov) contribute to firms’ and countries’ different performances. The empirical analysis also illustrates that firms which chose an outward orientation have higher productivity levels. Nevertheless, outward oriented enterprises are, at the same time, more sensitive to investment climate limitations. These findings have important policy implications by showing which dimensions of the business environment, in which industry, could help manufacturing firms to be more competitive in the present context of increasing globalization.
Keywords: Investment climate; Outward orientation; Manufacturing; Total factor productivity; Firm survey data. (search for similar items in EconPapers)
JEL-codes: C52 L21 O14 O12 D24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff and nep-sbm
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Working Paper: Investment climate, outward orientation and manufacturing firm productivity: New empirical evidence (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:cdi:wpaper:1889
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