Do Productive Capabilities Affect Export Performance? Evidence from African Firms

There is limited empirical evidence measuring productive capabilities and analysing their effect on firm-level export performance in Africa. This paper constructs novel indicators of productive capabilities and examines their effects on the export performance of African firms. Using recent firm-level data from the World Bank Enterprise Survey across 29 African countries, the paper builds new indicators of productive capabilities, which are conceptualised as a combination of technological and production capabilities. Estimating a censored regression model, we find that both technological and production capabilities are important drivers of firms’ direct export performance. This suggests that superior productive capabilities enhance the efficiency and competitiveness of firms, leading to improvements in their export performance. The findings underscore the importance of policies that support the strengthening of productive capabilities in African countries.