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

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World Bank (WB)

Abstract: 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.
Type: Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/3704
Subject: 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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