Explaining Africa’s (Dis)advantage : The Curse of Party Monopoly

Africa's economic performance has been widely viewed with pessimism. This paper uses firm-level data for 89 countries to examine formal firm performance. Without controls, manufacturing African firms do not perform much worse than firms in other regions. But they do have structural problems, exhibiting much lower export intensity and investment rates. Once the analysis controls for geography and the political and business environment, formal African firms robustly lead in sales growth, total factor productivity levels and productivity growth. Africa's conditional advantage is higher in low-tech than in high-tech manufacturing, and exists in manufacturing but not in services. While geography, infrastructure, and access to finance play an important role in explaining Africa's disadvantage in firm performance, the key factor is party monopoly. The longer a single political party remains in power, the lower are firm productivity levels, growth rates, and sales growth for manufacturing. In contrast, the business environment and firm characteristics (except for foreign investment) do not matter as much. The paper also finds evidence that the effects of the political and business environment are heterogeneous across sectors and firms of various levels of technology.

Bibliographic Details

Main Authors:	Harrison, Ann E., Lin, Justin Yifu, Xu, L. Colin
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2013-01
Subjects:	ACCOUNTING, ADVERSE EFFECT, ADVERSE EFFECTS, AGENCY PROBLEMS, AUTOMOBILE, BANK LOANS, BARRIER, BENCHMARK, BENCHMARKING, BINDING CONSTRAINTS, BUSINESS CLIMATE, BUSINESS ENVIRONMENT, BUSINESS ENVIRONMENTS, BUSINESS REGULATION, BUSINESSES, CAPITAL ALLOCATION, CAPITAL INTENSITY, CAPITAL STOCK, COLLECTIVE ACTION, COMMUNICATION INFRASTRUCTURE, COMPARATIVE ADVANTAGE, COMPARATIVE ECONOMICS, COMPETITIVENESS, CONTRACT ENFORCEMENT, CONVENTIONAL INSTRUMENTS, CUSTOM, DEMOCRACY, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DIRECT FOREIGN INVESTMENT, DIVISION OF LABOR, DOMESTIC COMPETITION, DOMESTIC MARKET, ECONOMETRICS, ECONOMIC BEHAVIOR, ECONOMIC DEVELOPMENT, ECONOMIC EFFICIENCY, ECONOMIC GROWTH, ECONOMIC OUTCOMES, ECONOMIC PERFORMANCE, ECONOMIC POLICIES, ECONOMIC RESEARCH, ECONOMICS, EFFICIENCY IMPROVEMENT, ELECTRICITY, EMPIRICAL ANALYSIS, EMPIRICAL STUDIES, EMPLOYMENT GROWTH, ENDOGENOUS VARIABLES, ENTERPRISE SURVEY, ENTERPRISE SURVEYS, ENVIRONMENTS, EQUIPMENT, EXPORTS, EXPOSURE, EXTERNAL FINANCE, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FIRM GROWTH, FIRM PERFORMANCE, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN OWNERSHIP, GDP, GDP PER CAPITA, GLOBAL MARKETS, GLOBALIZATION, GROWTH POTENTIAL, GROWTH RATE, GROWTH RATES, IMPUTATION, INCOME, INCOME GROUP, INCOME LEVELS, INDUSTRIALIZATION, INEFFICIENCY, INFLATION RATE, INFORMATION SHARING, INFORMATION TECHNOLOGY, INNOVATION, INPUT USE, INSTITUTIONAL ENVIRONMENT, INTERNATIONAL COMPETITION, INTERNATIONAL MARKET, INTERNATIONAL TRADE, INVESTMENT CLIMATE, JOB CREATION, LABOR COSTS, LABOR MARKET, LABOR MARKET FLEXIBILITY, LABOR MARKETS, LABOR PRODUCTIVITY, LABOR REGULATIONS, LEGAL CONSTRAINTS, LESS DEVELOPED COUNTRIES, MACROECONOMIC PERFORMANCE, MACROECONOMIC POLICIES, MANAGERIAL DISCRETION, MANUFACTURING, MANUFACTURING INDUSTRIES, MARKET COMPETITION, MARKET REGULATION, MARKET REGULATIONS, MATERIAL, MENU, MINIMUM WAGES, MONITORING MECHANISM, MONOPOLY, NATURAL RESOURCE, NATURAL RESOURCES, NETWORK DATA, NETWORKS, OPEN ACCESS, PERFORMANCE INDICATOR, PERFORMANCE MEASURE, PERFORMANCE MEASURES, POLICY MAKERS, POLITICAL ECONOMY, POLITICAL INSTITUTIONS, POLITICAL POWER, POSITIVE EFFECTS, PRIVATE INVESTMENT, PRIVATE SECTOR, PRIVATE SECTOR DEVELOPMENT, PRIVATIZATION, PRODUCERS, PRODUCTION FUNCTION, PRODUCTIVITY GROWTH, PROPERTY RIGHTS, REGIONAL TRADE, REGULATORS, RENTS, RESULT, RESULTS, RETAIL STORES, RISK SHARING, SAFETY, SALES GROWTH, SCALE EFFECTS, SEVERANCE PAY, STRUCTURAL CHANGE, SUSTAINABLE GROWTH, TAX, TAX RATE, TAXATION, TELECOM, TELECOMMUNICATION, TELECOMMUNICATIONS, TELEPHONE, TIME PERIOD, TOTAL FACTOR PRODUCTIVITY, TRADE BLOCS, TRADE FINANCE, UNEMPLOYMENT, URBANIZATION, USES, VALUE ADDED, WAGE STRUCTURE, WAGES, WEB, WORLD DEVELOPMENT INDICATORS, WORLD ECONOMY,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/17172552/explaining-africas-disadvantage-curse-party-monopoly http://hdl.handle.net/10986/12177
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