Market access, supplier access, and Africa's manufactured exports : an analysis of the role of geography and institutions

In a large cross-country sample of manufacturing establishments drawn from 188 cities, average exports per establishment are smaller for African firms than for businesses in other regions. The authors show that this is mainly because, on average, African firms face more adverse economic geography and operate in poorer institutional settings. Once they control for the quality of institutions and economic geography, what in effect is a negative African dummy disappears from the firm level exports equation they estimate. One part of the effect of geography operates through Africa's lower"foreign market access:"African firms are located further away from wealthier or denser potential export markets. A second occurs through the region's lower"supplier access:"African firms face steeper input prices, partly because of their physical distance from cheaper foreign suppliers, and partly because domestic substitutes for importable inputs are more expensive. Africa's poorer institutions reduce its manufactured exports directly, as well as indirectly, by lowering foreign market access and supplier access. Both geography and institutionsinfluence average firm level exports significantly more through their effect on the number of exporters than through their impact on how much each exporter sells in foreign markets.Free Trade,Markets and Market Access,Economic Theory&Research,Access to Markets,Foreign Direct Investment

Learning to Export: evidence from Moroccan manufacturing.

This paper tests two alternative models of learning to export: productivity learning, whereby firms learn to reduce production costs, and market learning, whereby firms learn to design products that appeal to foreign consumers. Using panel and cross-section data on Moroccan manufacturers, we uncover evidence of market learning but little evidence of productivity learning. These findings are consistent with the concentration of Moroccan manufacturing exports in consumer items, i.e.the garment, textile, and leather sectors. It is the young firms that export. Most do so immediately after creation. We also find that, among exporters, new products are exported very rapidly after production has begun. The share of exported output nevertheless increases for 2-3 years after a new ptroduct is introduced. Old forms are unlikely to switch to exports, even in response to changes in macro incentives. We find a positive relationship between exports and productivity and conclude tha it is the result of self-selection: it is the more productive firms that move into exports. Policy implications are discussed.

Learning to Export: Evidence from Moroccan Manufacturing

This paper tests two alternative models of learning to export: producitivity learning, whereby firms learn to reduce production costs, and market learning, whereby firms learn to design products that appeal to foreign consumers. Using panel and cross-reaction data on Moroccan manufacturers, we uncover evidence of market learning but little evidence of productivity learning. These findings are consistent with the concentration of Moroccan manufacturing exports in consumer items, i.e. the garment, textile, and leather sectors. It is the young firms that export. Most do so immediately after creation. We also find that, among exporters, new products are exported very rapidly after production has begun. The share of exported output nevertheless increases for 2-3 years after a new product is introduced. Old firms are unlikely to switch to exports, even in response to changes in macro incentives. We find a positive relationship between exports and productivity and conclude that it is the result of self-selection: it is the more productive firms that move into exports. Policy implications are discussed.

Learning to export: evidence from Moroccan manufacturing.

This paper test two alternative models of learning to export; productivity learning, whereby firms learn to reduce production costs, and market learning, whereby firms learn to design products that appeal to foreign consumers. Using panel and cross-section data on Moroccan manufacturers, we uncover evidence of market learning but little evidence of productivity learning. These findings are consistent with the concentration of Moroccan manufacturing exports in consumer items, i.e. the garment, textile, and leather sectors. It is the young firms that export. Most do so immediately after creation. We also find that, among exporters, new products are exported very rapidly after production has begun. The share of exported output nevertheless increases 2-3 years after a new product is introduced. Old firms are unlikely to switch to exports, even in response to changes in macro incentives. We find a positive relationship between exports and productivity and conclude that it is the result of self-selection: it is the more productive firms that move into exports. Policy implications are discussed.

Contract Flexibility and Dispute Resolution in African Manufacturing

This paper examines the contractual practices of African manufacturing firms using survey data collected in Burundi, Cameroon, Côte d’Ivoire, Kenya, Zambia, and Zimbabwe. Descriptive statistics and econometric results are presented. They show that contractual flexibility is pervasive and that relational contracting is the norm between manufacturers, their suppliers, and their clients. The existence of long-term relations between firms helps them deal with contract non-performance through negotiation. Confrontational methods such as lawyers and courts are used only by large firms and when negotiations fail. Whenever confrontation can be avoided, business is resumed. Of the six studied countries, incidence of breach and the use of lawyers and courts are highest in Zimbabwe which is also the country with legal institutions that best support business. Our favored interpretation is that good legal institutions incite firms to take more chances, thereby encouraging trade and leading to more cases of breach and more recourse to courts and lawyers. A high frequency of contract non-compliance should thus not be interpreted as a sign of imperfect legal institutions.

Credit constraints in manufacturing enterprises in Africa

We investigate the question whether firms in the manufacturing sector in Africa are credit constrained. The fact that few firms obtain credit is not sufficient to prove constraints, since certain firms may not have a demand for credit while others may be refused credit as part of profit maximising behaviour by banks. To investigate this question, we use direct evidence on whether firms had a demand of credit and whether their demand was satisfied in the formal credit market, based on panel data on firms in the manufacturing sector from six African countries. More than half the firms in the sample had no demand for credit. Of those firms with a demand for credit, only a quarter obtained a formal sector loan. In line with expectations, our analysis suggests that banks allocate credit on the basis of expected profits. However, controlling for credit demand, outstanding debt is positively related with obtaining further lending while micro or small firms are less likely to get a loan than large firms. The latter effect is strong and present in the regression, despite including several variables typically referred to as explaining why small or ‘informal’ firms do not get credit. The role of outstanding debt is likely to be a reflection of inefficiency in credit markets, while the fact that size matters is consistent with a bias as well, although we cannot totally exclude that they reflect transactions costs on the part of banks. Finally, we could not detect any differences between countries in the effects of these factors in the credit allocation rule, although financial deepening is found to explain most of the country-specific fixed effects, shifting the probability of obtaining credit across the firm distribution.

Do African Manufacturing Firms Learn from Exporting?

In this paper, we use firm-level panel data for the manufacturing sector in four African countries to estimate the effect of exporting on efficiency. Estimating simultaneously a production function and an export regression that control for unobserved firm effects, we find both significant efficiency gains from exporting, supporting the learning-byexporting hypothesis, and evidence for self-selection of more efficient firms into exporting. The evidence of learning-by-exporting suggests that Africa has much to gain from orientating its manufacturing sector towards exporting.

Do African manufacturing firms learn from exporting?

In this paper, we use firm-level panel data for the manufacturing sector in four African countries to estimate the effect of exporting on efficiency. Estimating simultaneously a production function and an export regression that control for unobserved firm effects, we find both significant efficiency gains from exporting, supporting the learning- byexporting hypothesis, and evidence for self-selection of more efficient firms into exporting. The evidence of learning-by-exporting suggests that Africa has much to gain from orientating its manufacturing sector towards exporting.

Investment in Africa's manufacturing sector: A four country panel data analysis

Firm-level data for the manufacturing sector in Africa, presented in this paper, shows very low levels of investment. A positive effect from profits onto investment is identified in a flexible accelerator specification of the investment function controlling for firm fixed effects. There is evidence that this effect is confined to smaller firms. A comparison with other studies shows that, for such firms, the profit effect is much smaller in Africa than in other countries. Reasons for the relative insensitivity of investment to profits in African firms are suggested.firm investment, liquidity constraints, African manufacturing

Exports and firm-level efficiency in African manufacturing.

In this paper, we use firm-level panel data for the manufacturing sector in four African countries to estimate the effect of exporting on efficiency. Measures of firm-level efficiency using stochastic production frontier models are constructed for the period 1992 to 1995. We find that there are large efficiency gains from exporting both in terms of levels and growth, and contrary to China, the gains are largest for the new entrants to exporting. We control for unobserved heterogeneity using a dynamic model with correlated random effects. Results are robust and consistently, we find evidence of a learning-by-exporting effect as well as self-selection of the most efficient firms into exporting. The effect of exporting on efficiency appears to be larger in this African sample than in comparable studies of other regions which is consistent with the smaller size of domestic markets2000