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Are African manufacturing firms really inefficient? Evidence from firm-level panel data

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  • Måns Söderbom
  • Francis Teal

Abstract

Three dimensions of the performance of firms in Ghana’s manufacturing sector are investigated in this paper: their technology and the importance of technical and allocative efficiency. We show that the diversity of factor choices is not due to a non-homothetic technology. Observable skills are not quantitatively important as determinants of productivity. Technical inefficiency is not lower in firms with foreign ownership or older firms and its dispersion across firms is similar to that found in other economies. Large firms face far higher relative labour costs than small firms. If these factor market distortions could be removed substantial gains thorough improvements in allocative efficiency would be possible.

Suggested Citation

  • Måns Söderbom & Francis Teal, 2001. "Are African manufacturing firms really inefficient? Evidence from firm-level panel data," CSAE Working Paper Series 2001-14, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2001-14
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    File URL: https://ora.ox.ac.uk/objects/uuid:580d414b-0312-4183-899d-5b024be25ed9
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    References listed on IDEAS

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    1. Måns Söderbom & Francis Teal, 2001. "Firm size and human capital as determinants of productivity and earnings," CSAE Working Paper Series 2001-09, Centre for the Study of African Economies, University of Oxford.
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    Cited by:

    1. Idrees Khawaja & Nasir Iqbal, 2019. "Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan," PIDE-Working Papers 2019:160, Pakistan Institute of Development Economics.
    2. Mungaray, Alejandro & Ramirez-Urquidy, Martin, 2007. "Capital humano y productividad en microempresas [Human Capital and Productivity in Microenterprises]," MPRA Paper 4064, University Library of Munich, Germany.

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    More about this item

    Keywords

    African manufacturing; productivity; efficiency; firm size;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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