Exporting to fragile states in Africa: Firm‐level evidence
Analyses the effect of fragility in destination markets on firm export behavior and the role of firm size in mediating adverse outcomes
Abstract
Chacha and Edwards (2019) analyses the effect of fragility in destination markets on firm export behavior and the role of firm size in mediating adverse outcomes. The analysis is conducted using firm transaction data on Kenyan exports to Africa over the period 2004-2013. The analysis reveals that fragility negatively affects a firm’s decision to enter a given destination market, reducing Kenya’s bilateral trade flows to African countries. Larger firms are more resilient to destination shocks in fragility and are less likely to exit. These results are robust to alternative measures of destination fragility, and the exclusion of bordering countries and the East African Community partner states. The authors’ analysis reveals that the effect of business fragility (regulatory quality, government effectiveness, and control of corruption) dominates that of political fragility (voice and accountability, rule of law, and political stability), although both effects are negative and significant.
This work is part of the Private Enterprise Development in Low Income Countries (PEDL) programme
Citation
Chacha, P. and Edwards, L. (2019) “Exporting to fragile states in Africa: Firm‐level evidence” Review of Development Economics