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Working Paper

Firm Productivity and Infrastructure Costs in East Africa

TARIFFS VEHICLE OPERATING COSTS WATER SERVICES TRANSPORT SECTOR EQUIPMENT ECONOMIC GROWTH INFRASTRUCTURE SERVICES PRODUCTION PRICE ELASTICITY OF DEMAND TRANSPORT INFRASTRUCTURE GENERATION ELASTICITY OF DEMAND QUALITY OF TRANSPORT ELASTICITY PRODUCTION INCREASES INFRASTRUCTURE DEVELOPMENT POLITICAL ECONOMY PUBLIC INFRASTRUCTURE VARIABLES ROAD INFRASTRUCTURE COMPUTER PROGRAM PRICE INPUTS RETURNS TO SCALE GENERATORS COMPUTER HIGHWAY INVESTMENT OPEN ACCESS TRANSPORT MODES COMMUNICATIONS MATHEMATICAL ECONOMICS INSTITUTIONS VEHICLE GENERATION CAPACITY DATA INTERNATIONAL BUSINESSES ROAD COSTS TRANSPORT ECONOMETRICS PRODUCTIVITY EXTERNALITIES HIGHWAY CONGESTION INDUSTRIALIZATION FAILURES FINANCIAL INSTITUTIONS BUSINESS SERVICES ELECTRICITY SUPPLY WEB ASSET REPLACEMENT TOTAL COSTS MATERIAL PRICE ELASTICITY PORTS INVENTORY ECONOMIC RESEARCH PRODUCTION INPUTS TELEPHONE INFRASTRUCTURE INFRASTRUCTURE INVESTMENT MANUFACTURING TECHNOLOGY TRANSACTION CONGESTION DRIVING TRANSPORTATION WAGES INTERNATIONAL TRADE ELECTRIC POWER INFRASTRUCTURE COSTS PRICE ELASTICITIES RESULTS COMPETITIVENESS POWER FACTOR DEMAND ELECTRICITY PRODUCTION FUNCTIONS ELASTICITIES LOCALIZATION INEFFICIENCY ELECTRICITY GENERATION AGRICULTURE DAYS OF INVENTORY MEASUREMENT TRANSACTION COSTS ECONOMIC ORDER HIGHWAYS PRODUCTION FUNCTION HIGHWAY INFRASTRUCTURE ROADS COMPARATIVE ECONOMICS INFRASTRUCTURE INVESTMENTS RESULT HIGHWAY TRADE ICT GDP GOODS THEORY BACK-UP ECONOMIES OF SCALE BUSINESSES BUSINESS NETWORK AGGLOMERATION ECONOMIES POSITIVE EXTERNALITIES INTERNATIONAL ENERGY PERFORMANCE BUSINESS ENVIRONMENT FUEL INVESTMENTS COMMUNICATION WATER INFRASTRUCTURE DATABASE TRANSPORT COSTS PROFITS RENTAL FEES ROAD TRANSPORT VEHICLE OPERATING COMMODITY POSITIVE EFFECTS FUEL COST FREIGHT AGGLOMERATION PRICES USES AGGLOMERATION EFFECTS PRODUCTION COSTS DEVELOPMENT POLICY
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World Bank, Washington, DC
Africa
2015-07-14T20:55:23Z | 2015-07-14T20:55:23Z | 2015-06

Infrastructure is an important driving force for economic growth. It reduces trade and transaction costs and stimulates the productivity of the economy. Africa has been lagging behind in the global manufacturing market. Among others, infrastructure is an important constraint in many African countries. Using firm-level data for East Africa, the paper reexamines the relationship between firm performance and infrastructure. It is shown that labor costs are by far the most important to stimulate firm production. Among the infrastructure sectors, electricity costs have the highest output elasticity, followed by transport costs. In addition, the paper shows that the quality of infrastructure is important to increase firm production. In particular, quality transport infrastructure seems to be essential. The paper also finds that agglomeration economies can reduce firm costs. The agglomeration elasticity is estimated at 0.03–0.04.

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