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Working Paper

Firm Inventory Behavior in East Africa

TOTAL REVENUE VEHICLE OPERATING COSTS TRAFFIC CONGESTION EQUIPMENT NETWORK DATA BUSINESS OPPORTUNITIES GLOBAL MARKETS MATERIALS TRANSPORT INFRASTRUCTURE TRANSPORTATION COSTS RAIL LINES INFORMATION QUALITY OF TRANSPORT ELASTICITY TRAFFIC HIGHWAY SYSTEM PEAK DEMAND ROAD INFRASTRUCTURE INPUTS TRANSPORT SERVICES TRANSPORTATION INFRASTRUCTURE TRANSPORT ACCESS CUSTOMS CLEARANCE DRIVERS OPEN ACCESS LOCAL TRANSPORTATION TRANSPORT MODES ECONOMIC ACTIVITY DEVELOPMENT INSTITUTIONS VEHICLE DATA TRADE SYSTEM ROAD COSTS TRANSPORT OPERATORS ROAD NETWORK ROAD SECTOR TRANSPORT IMPACT OF TRANSPORT INVENTORY LEVEL INTERSTATE HIGHWAY SYSTEM DOMAIN RAILWAY NETWORK CUSTOMS RAIL LINE PRODUCTIVITY AVERAGE TRANSIT TIME CONNECTIVITY TRUE WEB MATERIAL RAIL STATIONS INVENTORIES RURAL ROADS ROUTE INVENTORY PHYSICAL DISTANCE FREIGHT COSTS INFRASTRUCTURE LAND USE TRANSACTIONS INFRASTRUCTURE INVESTMENT MANUFACTURING TECHNOLOGY TRANSACTION SYSTEM DEVELOPMENT CONGESTION RELIABILITY OPPORTUNITY COST TRANSPORTATION INVENTORY LEVELS TRANSIT INTERNATIONAL TRADE SUPPLY NETWORK INFRASTRUCTURE COSTS RESULTS VALUE COMPETITIVENESS FOREIGN DIRECT INVESTMENT ACCESSIBILITY DEMAND NETWORKS MOTORWAYS INFRASTRUCTURE DEVELOPMENTS DAYS OF INVENTORY PASSENGER TRAFFIC OPPORTUNITY COSTS ECONOMIC ORDER LEVELS OF INVENTORY RAILWAY HIGHWAYS ECONOMIC THEORY SUPPLY CHAIN MINISTRY OF TRANSPORT HIGHWAY INFRASTRUCTURE ROAD USER ROADS LOCAL ROADS RESULT HIGHWAY TRADE ICT INTERSTATE HIGHWAYS RAILWAYS GOODS THEORY BUSINESSES BUSINESS NETWORK COMPARATIVE ADVANTAGE AGGLOMERATION ECONOMIES RAILROADS PERFORMANCE BUSINESS ENVIRONMENT RAIL MARKET DEMAND ECONOMIC ACTIVITIES INVESTMENTS COMMUNICATION SUPPLY CHAIN MANAGEMENT ROAD CONDITIONS URBAN ROADS TRANSPORT COSTS COMMUNICATION TECHNOLOGY ROAD TRANSPORT VEHICLE OPERATING URBAN TRAFFIC CONGESTION URBAN TRAFFIC HIGHWAY CAPITAL FREIGHT USES USER BOTTLENECKS HISTORIC CITIES DEVELOPMENT POLICY
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World Bank, Washington, DC
Africa | East Africa
2015-07-14T20:51:58Z | 2015-07-14T20:51:58Z | 2015-06

Firms normally keep certain inventories, including raw materials, work-in-progress, and finished goods, to operate seamlessly and not to miss possible business opportunities. But inventory is costly, and the optimal firm inventory differs depending on various economic conditions, including trade and transport costs. The paper examines firm inventory behavior in East Africa, in which transport connectivity, especially to the ports, is considered as one of the major business constraints. Using firm-level data from Burundi, Kenya, Rwanda, Tanzania, and Uganda, it is shown that transport connectivity significantly affects firm inventory behavior. In particular, road density and transport costs to the port are important to determine the optimal inventory level. With more roads in a city and/or cheaper access to the port, firms would hold smaller inventories.

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