Firms’ Productive Performance and the Investment Climate in Developing Economies : An Application to MENA Manufacturing
Drawing on the World Bank Investment Climate Assessment surveys, this paper investigates the relationship between firm-level technical efficiency and the investment climate for 22 developing economies and eight manufacturing industries. The authors...
| Main Authors: | , , |
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| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090319085313 http://hdl.handle.net/10986/4064 |
| Summary: | Drawing on the World Bank Investment
Climate Assessment surveys, this paper investigates the
relationship between firm-level technical efficiency and the
investment climate for 22 developing economies and eight
manufacturing industries. The authors first propose three
measures of firms' productive performance: labor
productivity, total factor productivity, and technical
efficiency. They show that, on average, enterprises in the
Middle East and North Africa have performed poorly compared
with other countries in the sample. The exception is
Morocco, whose various measures of firm-level productivity
rank close to the ones of the most productive economies. The
analysis also reveals that the competitiveness of countries
in the region has been handicapped by high unit labor cost,
compared with main competitors like China and India. The
empirical results show then? that the investment climate
matters for firms' productive performance. This is true
(depending on the industry) for the quality of various
infrastructure, the experience and education level of the
labor force, the cost of and access to financing, as well as
different dimensions of the government-business relation.
The analysis reveals that some industries, more exposed to
international competition, are more sensitive to investment
climate deficiencies. For some industries, this is also true
for small and medium domestic enterprises that do not have
the possibility to influence their investment climate or
choose their location. These findings bear clear policy
implications by showing that increasing firms' size and
improving the investment climate (in particular of small and
medium firms and industries more exposed to international
competition) could constitute a powerful means of industrial
development and competitiveness, in the Middle East and
North Africa region in particular. |
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