Are African manufacturing firms really inefficient? Evidence from firm-level panel data

Mans Soderbom and Francis Teal

No 2001-14, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: Three dimensions of the performance of firms in Ghana’s manufacturing sector are investigated in this paper: their technology and the importance of technical and allocative efficiency. We show that the diversity of factor choices is not due to a non-homothetic technology. Observable skills are not quantitatively important as determinants of productivity. Technical inefficiency is not lower in firms with foreign ownership or older firms and its dispersion across firms is similar to that found in other economies. Large firms face far higher relative labour costs than small firms. If these factor market distortions could be removed substantial gains thorough improvements in allocative efficiency would be possible.

Keywords: African manufacturing; productivity; efficiency; firm size (search for similar items in EconPapers)
JEL-codes: D24 O14 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (2)

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