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Firm Productivity and Infrastructure Costs in East Africa

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Infrastructure is an important constraint in many African countries. Using firm-level data for East Africa, this Study re-examines the relationship between firm performance and impact of infrastructure. It is shown that labor costs are by far the most important to stimulate firm production. Among the infrastructure sectors, electricity costs have the highest output elasticity, followed by transport costs. Therefore, this study shows that the quality of infrastructure is important to increase firm production. In particular, quality transport infrastructure seems to be essential. The paper also finds that agglomeration economies can reduce firm costs. The agglomeration elasticity is estimated at 0.03–0.04.


Iimi, Atsushi; Humphrey, Richard Martin; Melibaeva, Sevara. 2015. Firm Productivity and Infrastructure Costs in East Africa. Policy Research Working Paper;No. 7278. World Bank, Washington, DC. © World Bank. License: CC BY 3.0 IGO.


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