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Productivity premia and firm heterogeneity in Eastern Africa

Binyam Demena, Jamal Msami, Donald Mmari and Peter Bergeijk ()

No 680, ISS Working Papers - General Series from International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague

Abstract: Productivity development is a key issue for export-driven growth and development. We use East African Community (EAC) firm-level data. Instead of focusing on single EAC partners, using the World Bank Enterprise Surveys, investigate firm-level productivity difference for seven countries that are part of the COMESA-EAC-SADC tripartite free trade area (TFTA). Using export and ownership dimensions, we identify four types of firms: National Domestic, National Exporters, Foreign Domestic and Foreign Exporters. We find a clear export productivity premium for national manufacturing firms and service sectors, but not for foreign owned firms. We also find clear foreign-ownership productivity premium for both domestic and exporting firms in manufacturing sectors but less clear in services sectors. The gap between national export premium and foreign-ownership premium is stronger in manufacturing firms as opposed to service sectors. Moreover, we find clear and strong productivity premia in size, training programmes and level of development in the manufacturing firms. In the services sector, these premia are always smaller and only significant for medium-sized firms. There is no difference in experience premium between sectors in terms of both significance and magnitude of the estimated coefficients.

Keywords: Productivity; exports; firm heterogeneity; FDI; sub-Saharan Africa; EAC. (search for similar items in EconPapers)
JEL-codes: D20 F23 J24 O12 O55 (search for similar items in EconPapers)
Pages: 34
Date: 2021-05-06
New Economics Papers: this item is included in nep-afr, nep-bec, nep-eff, nep-int, nep-lma and nep-sbm
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