Productivity Determinants in the Manufacturing Sector in Ethiopia

A paper titled ‘Productivity Determinants in the Manufacturing Sector in Ethiopia: Evidence from the Textile and Garment Sector’ was presented by Tsegay G. Teklesilassie (PhD), Research Fellow at EDRI, in EDRI’s seminar series held on 22 September 2017. Involved in the research undertaking are Tsegay G Tekleselassie (PhD), Kidanemariam Berhe (PhD), Tigabu Degu (PhD), Girum Abebe (PhD) and Gebrehiwot Ageba (PhD). 

                                                                

Tsegay G Tekleselassie  Kidanemariam Berhe          Tigabu Degu                 Girum Abebe (PhD)        Gebrehiwot Ageba

 

Abstract

The study aims at exploring the determinants of productivity in the textile and garment industries in Ethiopia using a census data of the 137 firms EDRI collected in 2016. The study reveals that labour and material inputs drive firm level outputs while the elasticity of output to capital input is weak. This could be due to the labour and material intensive nature of the textile and garment industries. Moreover, our analysis uncovers that human capital, agglomeration effects, and incentive systems to be core drivers of productivity in the textile and garment sector in Ethiopia. To overcome endogeneity caused by potential simultaneous determination productivity shocks and labour input, the Levishom-Petrin estimator was used on two-year panel-data constructed using a recall data for 2015. The cross-sectional and panel data estimators yield qualitatively similar results in our study.

 

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