Firm Productivity and Investment Climate in Developing Countries: How Does Middle East and North Africa Manufacturing Perform?

Kinda, Tidiane; Plane, Patrick; Véganzonès‐Varoudakis, Marie‐Ange

doi:10.1111/j.1746-1049.2011.00146.x

Cited by 45 publications

(41 citation statements)

References 75 publications

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“…However, most of the previous evidences supported a positive relation between these two variables. Kinda et al [58] studied the relationship between investment climate and firm productivity in the Middle East and North Africa and showed that the cost and access to finance lead to firm performance discrepancies. Fernandes [66] and Biesebroeck [67] found a positive link between access to overdraft facilities and firm TFP and a negative association between bank loan accessibility and firm TFP in Bangladesh and in several African countries.…”

Section: Discussionmentioning

confidence: 99%

“…In all estimations, we also included the firm-specific factors (characteristics of the firm itself) and external environment factors that affected firms' economic performance. The benchmark for selecting these firm specific and investment climate variables follows the studies of Giang et al [30], Bastos and Nasir [55], Escribano and Guasch [56], Dollar et al [57], and Kinda et al [58]. To be more specific, we imposed a set of firm-specific variables: firm size, age, and export.…”

Section: Datamentioning

confidence: 99%

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The Causal Effect of Access to Finance on Productivity of Small and Medium Enterprises in Vietnam

et al. 2019

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In many developing countries, obtaining financial services at affordable rates and fair terms has been a significant challenge for small and medium enterprises (SMEs). However, this issue has not been paid much attention in Vietnam, even though SMEs account for about 95% of total enterprises and the financial market of the country has not been well developed. This study investigates the causal effects of access to finance on productivity of SMEs operating in the manufacturing sector in Vietnam. Productivity was measured as the total factor productivity (TFP) obtained by production function estimation using the Levinsohn and Petrin approach. Regarding financial accessibility, two factors covered the extent to which firms might have a bank loan or overdraft facility were employed. To study the causal inferences of access to finance on firm productivity, the research adopted the difference-in-differences (DID) approach, as well as the propensity score matching (PSM) coupled with DID technique. The empirical results indicated that improving the financial accessibility could directly enhance firm productivity. Particularly, it was shown that firms having access to a bank loan could significantly improve TFP by approximately 8.6% in the DID model and about 9% in the PSM-DID model. Meanwhile, the firm average TFP increased by approximately 12.3% and 15.7% in simple DID and PSM-DID models, respectively, when firms had an overdraft facility. These findings suggest that the government should put more effort into assisting SMEs in generating bankable projects, and create a sound and healthy financial environment to stimulate firms’ access to finance, which will ensure their sustainability and growth.

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Section: Discussionmentioning

confidence: 99%

Section: Datamentioning

confidence: 99%

The Causal Effect of Access to Finance on Productivity of Small and Medium Enterprises in Vietnam

et al. 2019

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“…Moretti, 2004, van Biesebroeck, 2005, Foster et al, 2008, Nichter and Goldmark, 2009, Bloom and van Reenen, 2010, Ali and Peerlings, 2011, Amin, 2011, Kinda et al, 2011, Martin et al, 2011, Saliola and Seker, 2011, Rijkers and Costa, 2012, Bloom et al, 2013). Only a few studies have analyzed enterprise performance in sub-Saharan Africa.…”

Section: Literature Reviewmentioning

confidence: 98%

Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence

2017

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We report on the prevalence and patterns of non-farm enterprises in six sub-Saharan African countries, and study their performance in terms of labor productivity, survival and exit, using the World Bank’s Living Standards Measurement Study - Integrated Surveys on Agriculture (LSMS-ISA). Rural households operate enterprises due to both push and pull factors and tend to do so predominantly in easy-to-enter activities, such as sales and trade, rather than in activities that require higher starting costs, such as transport services, or educational investment, such as professional services. Labor productivity differs widely: rural and female-headed enterprises, those located further away from population centers, and businesses that operate intermittently have lower levels of labor productivity compared to urban and male-owned enterprises, or enterprises that operate throughout the year. Finally, rural enterprises exit the market primarily due to a lack of profitability or finance, and due to idiosyncratic shocks.

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“…However, the elasticity of the production to the inputs in the Cobb-Douglas is easier to interpret than in translogarithmic production. To be more specific, the translog technology generally suffers from a collinearity problem among the regressors (Kinda et al 2011). Thus, in this study, we assumed that production technology followed Cobb-Douglas production functions.…”

Section: Measurement Of Firm Productivitymentioning

confidence: 99%

Total Factor Productivity of Agricultural Firms in Vietnam and Its Relevant Determinants

et al. 2019

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In Vietnam, agriculture is a key sector that promotes economic growth and poverty reduction. Therefore, improving productivity in agriculture is indispensable to the sustainability of the country. This research examined productivity and its determinants from 420 enterprises operating in agriculture. Productivity was measured as the total factor productivity (TFP) obtained from fixed and random effects models. The determinants of TFP including size and age, share of state and foreign ownership, export, accessibility to Internet and bank loan of firms, controlled for year fixed effects, were analyzed. It was shown that 74.6% companies in the agricultural sector were small in size (<10<200 employees). Although the number of large firms (>300 employees) explained 10.6%, they had a remarkable and positive TFP (38.8%, p < 0.01), while both small and very small (<10, and <200 employees, respectively) had strikingly negative TFP values (−71.3% and −32.1%, respectively, p < 0.01), as compared to the medium sizes (<200<300 employees). It was also revealed that although foreign ownership was only 3.8% on average, it had a notably positive effect on TFP (55.0%, p < 0.01). In contrast, state ownership accounted for 30.7%, but it had a negative influence on TFP (−7.5%). The export contributed a negligible and statistically significant effect to TFP (2.6%), which might be attributed to a limited number of firms (4.5%) having mobility in agricultural export. 73% received a bank loan, and only 18.2% had access to the Internet, but both of them yielded remarkable TFP values (18.5%, p < 0.01 and 3.4%, p < 0.05 respectively). The Hausman test indicated that the fixed effects (FE) model was more effective than the random effects (RE) model to estimate the TFP. The findings of this study suggested that reform efforts should focus on improving the productivity of small agricultural enterprises. In addition, foreign investment, effective use of bank loan and Internet accessibility should be further enhanced. The results of this study may provide insights for policymakers who aim to improve the productivity in agricultural enterprises and thereby contribute to the sustainable growth of the country.

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Firm Productivity and Investment Climate in Developing Countries: How Does Middle East and North Africa Manufacturing Perform?

Cited by 45 publications

References 75 publications

The Causal Effect of Access to Finance on Productivity of Small and Medium Enterprises in Vietnam

The Causal Effect of Access to Finance on Productivity of Small and Medium Enterprises in Vietnam

Non-farm entrepreneurship in rural sub-Saharan Africa: New empirical evidence

Total Factor Productivity of Agricultural Firms in Vietnam and Its Relevant Determinants

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