This paper analyzes the risk of exit for privately-owned manufacturing establishments in a small African economy. It shows that changes in the structure of ownership following an economic reform have important implications on establishment survival.The risk of exit is lower for establishments that belong to multi-unit firms as compared to single-unit establishments suggesting the presence of information and risk sharing mechanisms within a group. Although female-owned businesses tend to be smaller in size, they have better chances of survival than male-owned establishments. The probability of exit also declines significantly in establishment size and productivity. JEL Classification: D21; L11
This paper investigates the processes of market selection and industry dynamics in a Sub-Saharan Africa context. Using census based longitudinal data it examines the distribution of productivity within an industry to determine whether patterns of firm entry, exit and survival are driven by underlying efficiency differences. It also estimates the contribution to industry level productivity growth of the reallocation of resources and market share from less efficient producers to more efficient ones. The paper concludes that markets in Sub-Saharan Africa, as represented by Ethiopia, are at least as strong as other regions in selecting efficient firms. Tolerance of inefficient firms also declines with the degree of exposure to international competition. While reallocation of resources played a positive and significant role for industry level productivity, it has only managed to offset the declining tendency in intra-firm productivity.
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