The Impact of the Investment Climate on Employment Growth : Does Sub-Saharan Africa Mirror Other Low-Income Regions?
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...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| 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_20100223151145 http://hdl.handle.net/10986/3704 |
| Summary: | 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. |
|---|