In this CGD Brief, Todd Moss and Vijaya Ramachandran analyze the survey results of 300-400 manufacturing firms in Kenya, Tanzania and Uganda. Their main finding? Foreign firms perform better than local firms in generating jobs, increasing the productivty of their workers, and in skills transfer.
Business Environment and Comparative Advantage in Africa: Evidence from the Investment Climate Data - Working Paper 56
This paper ties together the macroeconomic and microeconomic evidence on the competitiveness of African manufacturing sectors. The conceptual framework is based on the newer theories that see the evolution of comparative advantage as influenced by the business climate—a key public good—and by external economies between clusters of firms entering in related sectors. Macroeconomic data from purchasing power parity (PPP), though imprecisely measured, estimates confirms that Africa is high-cost relative to its levels of income and productivity. This finding is compared with firm-level evidence from surveys undertaken for Investment Climate Assessments in 2000-2004.