The Determinant of Firm Location in Tanzania

Javier Sanchez-Reaza

No 30544283, Jobs Group Papers, Notes, and Guides from The World Bank

Abstract: This paper identifies the factors that affect the location of firms in Tanzania. Using a binomialeconometric strategy to address data gaps in firm location at the ward level, the paper groups factors into firm characteristics, market features, and two types of agglomeration economies that capture economies of scale external to the firm. The benefits of agglomeration may stem from specialization within and among firms (referred to in the literature as localization economies) or from diversification across firms (referred to as urbanization economies). The distinction between these two lies at the heart of the discussion on firm location. Regression results indicate that, of the various factors tested, the most important determinant driving firm location is the jobs diversification aspect of urban economies. Other contributing factors are localization economies (jobs specialization), competitive markets, and market access. Based on these findings, policymakers seeking to foster agglomeration could orient policies toward promoting firm entry within cities, complementary investments in urban infrastructure and the urban pool of labor, regulations that support competition, and improvements in market access for large cities. But localization economies are also significant in Tanzania, and could be encouraged through investment in smaller population centers and increasing competition and market access beyond the primary urban centers of Dar-es-Salaam and Arusha.

Keywords: Trade and Economic Growth; Housing and Population Census; access to secondary school; paper issue; firm location; firm size; agglomeration economy; economies of scale; urban agglomeration economy; choice of variables; localization economies; agriculture and service; number of workers; public private partnership; number of jobs; public-private partnership; trade and growth; large urban areas; implications for policy; large urban centers; main urban center; indicators of access; factor of production; demand for land; degree of competition; division of labor; jobs and growth; limited dependent variable; privileges and immunity; firm size distribution; degree of concentration; census of population; Population Density; road density; ward levels; tertiary road; market access; regression results; Labor Market; explanatory variable; External Economies; urban ward; industrial sector; firm concentration; rural area; Regional Studies; model specification; firm linkage; micro firms; market characteristic; econometric model; Political Economy; manufacturing industry; Social Sciences; independent variable; high concentration; average employment; market power; primary road; business service; secondary road; complementary activities; knowledge spillover; transport cost; regression model; firm entry; economic diversity; production process; correlation matrix; standard error; national economy; industrial location; sampling frame; micro enterprise; Job Dynamics; inconsistent estimate; pull factor; skewed distribution; wage employment; labor pool; normal distribution; response variable; sample design; statistical significance; survey data; rural level; job growth; industrial structure; geographic extent; large population; regional characteristic; population figures; Public Goods; geographical size; transportation cost; administrative level; population size; high transport; intermediate level; confidence interval; land area; market coordination; economic liberalization; industrial employment; data model; production structure; state intervention; methodological choice; spatial concentration; linear function; expected value; positive spillover; Urban Infrastructure; incentive framework; high wage; small population; Job Quality; productive infrastructure; empirical findings; complementary investment; ongoing support; market competition; leather industry; empirical evidence; firm exit; spatial model; positive relationship; comparative advantage; market feature; population center; spatial autocorrelation; employment growth; copyright owner; sector activity; sole responsibility; original work; increasing return; discussion papers; alternative measure; urban economy; competitive market; commercial purpose; industrial base; manufacturing jobs; oecd countries; industrialized country; urban study; global market; land price; congestion cost; manufacturing sector; monopolistic competition; product market; agricultural jobs; employment share; regional specialization; market concentration; knowledge generation; knowledge diffusion; regional science; positive externality; urban setting; significant correlation; industry cluster; urban nature; smallholder farmer; improved livelihood; trade model; trade theory; quantitative techniques; economic model; Industrialized countries (search for similar items in EconPapers)
Pages: 37
Date: 2018-10-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://documents.worldbank.org/curated/en/91191154 ... Location-in-Tanzania

Related works:
Working Paper: The Determinants of Firm Location in Tanzania (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:jbsgrp:30544283

Access Statistics for this paper

More papers in Jobs Group Papers, Notes, and Guides from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Selome Assefa Hailemariam ().