Abstract

Agglomeration economies are among the most important factors to increase firm productivity. However, there is little evidence supportive of this in Africa. By applying the conditional and nested logit models, this paper examines the relationship between firm locations and infrastructure accessibility in Rwanda. It is found that agglomeration economies matter to even one of the smallest countries in Africa. It is also found that infrastructure availability has an important role in affecting the firm location decision. Electricity access and transport connectivity to the domestic and international markets are found to be important to attract new investment. In addition, the quality of local labor supplied, measured by educational attainment, is found as an important determinant of firm location, while the effect of labor costs remains inconclusive. Document type: Book

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. Document type: Book

Abstract

This study uses Twitter data to provide a more nuanced understanding of the public reaction to the 2011 reform to the propane gas subsidy in El Salvador. By soliciting a small sample of manually tagged tweets, the study identifies the subject matter and sentiment of all tweets during six one-month periods over three years that concern the subsidy reform. The paper shows that such an analysis using Twitter data can provide a useful complement to existing household survey data and even potentially replace survey data if none were available. The finding show that when people tweet about the subsidy, they almost always do so in a negative manner; and there is a decline in discussion of topics about the reform subsidy, which coincides with increase in support for the subsidy as reported elsewhere. Therefore, the study concludes that decreasing discussion of the subsidy reform indicates an increase in support for the reform. In addition, the gas distributor strikes of May 2011 may have contributed to public perception of the reform more than previously acknowledged. This study is used as an opportunity to provide methodological guidance for researchers who wish to undertake similar studies, documenting the steps in the analysis pipeline with detail and noting the challenges inherent in obtaining data, classification, and inference. Document type: Book

Abstract

Firms normally keep certain inventories, including raw materials, work-in-progress, and finished goods, to operate seamlessly and not to miss possible business opportunities. But inventory is costly, and the optimal firm inventory differs depending on various economic conditions, including trade and transport costs. The paper examines firm inventory behavior in East Africa, in which transport connectivity, especially to the ports, is considered as one of the major business constraints. Using firm-level data from Burundi, Kenya, Rwanda, Tanzania, and Uganda, it is shown that transport connectivity significantly affects firm inventory behavior. In particular, road density and transport costs to the port are important to determine the optimal inventory level. With more roads in a city and/or cheaper access to the port, firms would hold smaller inventories. Document type: Book