Determinants of African Manufacturing Investment: the Microeconomic Evidence

01/2001; DOI: 10.1093/jae/10.Suppl2.48
Source: OAI

ABSTRACT In this survey paper we consider the microeconomic evidence on investment in African manufacturing. <?Pub Caret>We analyse both the determinants of investment behaviour and the return to that investment. In the 1990s market selection — the process by which the capital stock is reallocated in favour of more efficient firms — has been as strong in Africa as elsewhere. While the macroeconomic literature has focused on low returns to investment as an explanation for Africa's poor growth performance, the micro&hyphen;data indicate high potential returns. However, investment rates remain quite low, presumably as a result of risk, but the surveys currently available are not suitable for testing this.

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