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Firms’ Locational Choice and Infrastructure Development in Tanzania : Instrumental Variable Spatial Autoregressive Model

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World Bank (WB)

Abstract: Agglomeration economies are among the most important factors in increasing firm productivity. However, there is little evidence supportive of this in Africa. Using the firm registry database in Tanzania, this paper examines a new application of the logit approach with two empirical issues taken into account: spatial autocorrelation and endogeneity of infrastructure placement. The paper finds significant agglomeration economies. It is also found that firms are more likely to be located where local connectivity and access to markets are good. The paper finds that dealing with infrastructure endogeneity and spatial autocorrelation in the empirical model is important. According to the exogeneity test, infrastructure variables are likely endogenous. The spatial autoregressive term is significant. As expected, therefore, there are positive externalities of firm location choice around the neighboring areas.
Type: Working Paper
Publications & Research
Publications & Research :: Policy Research Working Paper
Link: http://hdl.handle.net/10986/22178
Subject: BUSINESS ACTIVITIES
EMPLOYMENT
VEHICLE OPERATING COSTS
ECONOMIC GROWTH
INFRASTRUCTURE SERVICES
PRODUCTION
AGGLOMERATION EFFECT
MATERIALS
CARGO HANDLING
TRANSPORT INFRASTRUCTURE
GENERATION
EXPORTS
ELASTICITY
INFRASTRUCTURE DEVELOPMENT
POLITICAL ECONOMY
ECONOMIC STRUCTURE
PUBLIC INFRASTRUCTURE
INDUSTRIAL DEVELOPMENT
VARIABLES
LOCAL CONNECTIVITY
HIGHWAY SYSTEM
TAX
INPUTS
REGISTRY
LOCAL GOVERNMENT FINANCE
TRANSPORTATION INFRASTRUCTURE
TRANSPORT ACCESS
DRIVERS
COMPUTER
OPEN ACCESS
TRANSPORT MODES
ECONOMIC ACTIVITY
CHOICE
VEHICLE
DATA
INFLUENCE
TRANSPORT INVESTMENTS
ROAD
INFRASTRUCTURE ACCESS
CARGO
COSTS
ROAD NETWORK
TRANSPORT
INTERSTATE HIGHWAY SYSTEM
INFRASTRUCTURE PROJECT
RENT
CUSTOMS
RAIL LINE
COST OF POWER
GROWTH PATH
PRODUCTIVITY
ECONOMETRICS
EXTERNALITIES
INDUSTRIALIZATION
INCREASING RETURNS
CRITERIA
MARKETS
PRIVATE INVESTMENT
ELECTRICITY SUPPLY
CONNECTIVITY
WEB
ENTERPRISES
RAIL STATIONS
PORTS
NATURAL RESOURCES
ROUTE
ECONOMIC RESEARCH
RESIDENTIAL USERS
INFRASTRUCTURE
INFRASTRUCTURE INVESTMENT
MANUFACTURING
USERS
TECHNOLOGY
ECONOMIC ZONES
TRANSACTION
VALUE ADDED
FIRMS
TRANSPORTATION
MARKET POTENTIAL
WAGES
GLOBAL MARKET
POLICIES
RESULTS
MARKET CONDITIONS
NESTED LOGIT MODEL
VALUE
COMPETITIVENESS
POWER
FOREIGN DIRECT INVESTMENT
ELECTRICITY
ELASTICITIES
CREDIT
PRODUCT DIFFERENTIATION
ACCESSIBILITY
MARKET ACCESSIBILITY
AGRICULTURE
INFRASTRUCTURE DEVELOPMENTS
MEASUREMENT
TRANSACTION COSTS
RAILWAY
HIGHWAYS
GOOD TRANSPORT
ENDOGENOUS VARIABLES
DIVERSIFICATION
TAX REVENUE
ROADS
ADMINISTRATION
INFRASTRUCTURE INVESTMENTS
RESULT
TAXATION
HIGHWAY
TRADE
RAILWAYS
INTERSTATE HIGHWAYS
THEORY
BUSINESSES
BUSINESS
INVESTMENT
NETWORK
AGGLOMERATION ECONOMIES
POSITIVE EXTERNALITIES
RAILROADS
AUTOREGRESSION
PERFORMANCE
RAIL
POLICY SUPPORT
PROFIT
INVESTMENTS
COMMODITIES
ROAD CONDITIONS
ECONOMIC GEOGRAPHY
DATABASE
TRANSPORT COSTS
VEHICLE OPERATING
COMMODITY
INTERNATIONAL MARKETS
AGGLOMERATION
PRICES
AGGLOMERATION EFFECTS
DEVELOPMENT POLICY
HISTORIC CITIES




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