Competition, Competitiveness and Growth in Sub-Saharan Africa

By Reda Cherif, Sandesh Dhungana, Xiangming Fang, Jesus R Gonzalez-Garcia, Yuanchen Yang, Mustafa Yenice, Jung Eun Yoon

February 14, 2020

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Reda Cherif, Sandesh Dhungana, Xiangming Fang, Jesus R Gonzalez-Garcia, Yuanchen Yang, Mustafa Yenice, and Jung Eun Yoon. Competition, Competitiveness and Growth in Sub-Saharan Africa, (USA: International Monetary Fund, 2020) accessed December 24, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Does greater product market competition improve external competitiveness and growth? This paper examines this question by using country-and firm-level data for a sample of 39 sub-Saharan African countries over 2000–17, as well as other emerging market economies and developing countries, and finds that an improvement in domestic competition is associated with a signficant increase in real GDP per capita growth rate, achieved mainly through an improvement in export competitiveness and productivity growth. Price levels, including of essential items, are also generally lowered with an increase in competition. Moreover, at the firm-level, evidence shows that greater competition—proxied through a decline in corporate market power—is associated with an increase in firm’s investment and the labor’s share in output. These effects are more pronounced in the manufacturing sector and among domestic firms compared to foreign firms.

Subject: Commodity markets, Competition, Emerging and frontier financial markets, Financial markets, Labor, Labor share, Production, Productivity

Keywords: Africa, Commodity markets, Competition, Competition indicator, Cost minimization problem, Emerging and frontier financial markets, Enterprise data, Firm Dynamics, Firm markup, Firm profitability, Firm-level indicators, Global, Labor share, Market Power, Markups, Productivity, Sub-Saharan Africa, WP

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/030
Stock No:

WPIEA2020030
ISBN:

9781513526379
ISSN:

1018-5941

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