Explaining Africa's (Dis)Advantage

56 Pages Posted: 12 Jan 2013 Last revised: 21 Jul 2023

See all articles by Ann E. Harrison

Ann E. Harrison

University of California, Berkeley; National Bureau of Economic Research (NBER)

Justin Lin

University of Michigan at Ann Arbor

Lixin Colin Xu

Cheung Kong Graduate School of Business

Date Written: January 2013

Abstract

Africa's economic performance has been widely viewed with pessimism. In this paper, we use firm-level data for around 80 countries to examine formal firm performance. Without controls, manufacturing African firms perform significantly worse than firms in other regions. They have lower productivity levels and growth rates, export less, and have lower investment rates. Once we control for geography, political competition and the business environment, formal African firms lead in productivity levels and growth. Africa's conditional advantage is higher in low-tech than in high-tech manufacturing, and exists in manufacturing but not in services. The key factors explaining Africa's disadvantage at the firm level are lack of infrastructure, access to finance, and political competition.

Suggested Citation

Harrison, Ann E. and Lin, Justin and Xu, Lixin Colin, Explaining Africa's (Dis)Advantage (January 2013). NBER Working Paper No. w18683, Available at SSRN: https://ssrn.com/abstract=2199740

Ann E. Harrison (Contact Author)

University of California, Berkeley ( email )

Giannini Hall
Berkeley, CA 94720-3880
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Justin Lin

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Lixin Colin Xu

Cheung Kong Graduate School of Business ( email )

1017, Oriental Plaza 1
No.1 Dong Chang'an Street
Beijing
China

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