Finding Obstacles to Growth: Is Infrastructure a Binding Constraint on African Light-manufacturing Firms?

Year 2015, Volume: 5 Issue: 3, 820 - 832, 01.09.2015

Stefan Reppen

Abstract

For African countries to develop and reduce poverty, it is necessary to create productive jobs and industrialise – which can happen through the light manufacturing sector. For such firms to grow, however, a good business environment is necessary. Thus, this paper analyses whether infrastructure puts a binding constraint on light-manufacturing firms in 8 African countries, and thus comprise a real bottleneck for development. The results indicate that there indeed exists a real bottleneck because of insufficient infrastructure for light manufacturing firms in general. However, there does not seem to be any significant difference between different sub sectors within the light-manufacturing sector. These findings indicate that, even at current levels of productivity, a relaxation of the constraints (i.e. improvements in the infrastructure supply) would significantly increase the economic activity, even without improvements in other areas of the business environment.

Keywords

light manufacturing, Africa, infrastructure