Does Domestic Concentration Cancel the Potentially Beneficial Effect of International Competition on Firm Productivity? Evidence from Manufacturing Firms in Cameroon

Abstract

Using manufacturing firm-level data from the World Bank Enterprise Surveys (WBES) in 2009 and 2016 and Cameroon’s general enterprise censuses, this paper empirically investigates the joint effect of domestic concentration and international competition on productivity. Instrumental variable estimates suggest that exports improve the productivity of firms operating only in industries where concentration is very low. Moreover, participation in the international market has no effect on the productivity of firms operating in the moderately and highly concentrated sectors. Thus, although concentration has no direct effect on productivity, it nevertheless reduces the positive effect of international competition (through exports). This study not only serves as a reference for future investigations but also carries significant theoretical and empirical implications.