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The Impact of the Investment Climate on Employment Growth : Does Sub-Saharan Africa Mirror Other Low-Income Regions?

ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FORMAL FINANCE ACCESS TO SERVICES ACCOUNTING ACCOUNTING SERVICES ADVANCED TECHNOLOGIES AFFILIATED ORGANIZATIONS BANK LOANS BANKS BENEFICIAL EFFECTS BRIBE BRIBES BUSINESS ENVIRONMENT CONTRACT ENFORCEMENT CORRUPTION CREDIT CONSTRAINTS CREDIT PROVISION CREDIT RELATIONSHIPS CREDITOR DEMAND FOR CREDIT DEVELOPMENT BANK DEVELOPMENT ECONOMICS EARNINGS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICY ECONOMIES OF SCALE EMPLOYMENT EMPLOYMENT GROWTH EMPLOYMENT OPPORTUNITIES EMPLOYMENT TRENDS ENDOWMENTS ENTERPRISE DEVELOPMENT ENTERPRISE GROWTH ENTERPRISE SIZE ENTERPRISE SIZES ENTREPRENEUR ENTREPRENEURS ENTREPRENEURSHIP EXCLUSION EXPANSION EXTERNAL FINANCING FINANCIAL MEASURE FIRM SIZE FIRMS FOREIGN CAPITAL FOREIGN ENTERPRISES FOREIGN OWNED ENTERPRISES GOVERNMENT REGULATIONS GREATER ACCESS INCOME INCOME GROUP INCOME GROUPS INFLATION INFORMATION ON ENTERPRISE INFORMATION ON ENTERPRISES INTERNATIONAL BANK INVESTMENT CLIMATE INVESTMENT CLIMATE CONDITIONS INVESTMENT CLIMATE CONSTRAINTS JOB CREATION LABOR INTENSIVE TECHNOLOGIES LABOR MARKETS LABOR REGULATIONS LABOUR LACK OF ACCESS LARGE ENTERPRISES LIMITED ACCESS LIMITED ACCESS TO FINANCE LOAN MACROECONOMICS MANUFACTURING ENTERPRISE MANUFACTURING ENTERPRISES MARKET DEVELOPMENT MEDIUM ENTERPRISES MICRO ENTERPRISE MICRO ENTERPRISES MICRO-ENTERPRISES OVERDRAFT PRIVATE INVESTMENT PRODUCTIVE ENTERPRISES PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC INVESTMENT PUBLIC SERVICES RED TAPE REGULATORY BURDENS RESOURCE ALLOCATION RETAINED EARNINGS SAFETY SAFETY NETS SALES GROWTH SIZE OF ENTERPRISE SIZE OF ENTERPRISES SMALL ENTERPRISE SMALL ENTERPRISES SMALL FIRMS SMALL ENTERPRISE SME TAX ADMINISTRATION TAXATION TRADE CREDIT TRANSPORT WORKING CAPITAL
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Africa | The World Region
2012-03-19T18:38:13Z | 2012-03-19T18:38:13Z | 2010-02-01

Using survey data from 86,000 enterprises in 104 countries, including 17,000 enterprises in 31 Sub-Saharan African countries, this paper finds that average enterprise-level employment growth rates are remarkably similar across regions. This is true despite significant differences in the quality of the investment climate in which these enterprises operate. Objective measures of investment climate conditions (including the number of outages, the share of firms with bank loans, and others) indicate that conditions are most challenging within Sub-Saharan Africa, as well as for smaller enterprises. However, enterprises employment in Sub-Saharan Africa is less sensitive to changes in access to infrastructure and finance relative to other low-income regions. This can be understood by looking at non-linear effects by firm size -- and the finding that these size effects are particularly strong within Sub-Saharan Africa. Although unreliable infrastructure services and inadequate access to finance generally hamper growth, in Sub-Saharan Africa they are actually associated with higher employment growth rates among micro enterprises. Although employment growth is good news in Sub-Saharan Africa, that much of the expanded employment is in small, labor-intensive, less productive enterprises raises longer-run concerns about the efficiency of the allocation of resources and aggregate productivity growth in the region.

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