Manufacturing in Africa: the Determinants of Location-based Spillovers and Organizational Practices

Abstract: Much of the research in African manufacturing focuses on small and micro enterprises. In this paper, we focus on medium and large manufacturing firms and present a series of new stylized facts on patterns of ownership, management practices, and organizational structures of these firms. In particular, we contrast the patterns of adoption in Africa versus other developing regions in Latin America and Asia. We document the ability of multinational corporations (MNEs) in these countries to adopt significantly better practices relative to the domestic firms, and explore the determinants of divergent spillovers from MNEs to domestic firms across these areas. We use new data from the Ownership Survey, the World Management Survey and the World Bank’s enterprise survey to exploit variation in firm location and age as determinants of organizational choices. As the largest share of firms are still controlled by their founders, we document the most salient founder characteristics as well as the differences between founder-run firms and other types of ownership structures. We characterize the patterns we present in the stylized facts by placing them in the context of industrial development over decades in Africa.