This study examines energy efficiency in Ethiopia's manufacturing sector from 2000 to 2016, focusing on firms with at least 10 employees. Using an input distance function within a stochastic frontier framework, we estimate energy inefficiency based on firm characteristics such as export intensity, investment, capacity utilization, age, and ownership. Our findings suggest that Ethiopian firms could reduce energy consumption by 36%, with reductions of 13% and 27% for persistent and transient energy inefficiency, respectively. We find that private ownership and capacity utilization enhance energy efficiency, while exporting and new capital investment increase inefficiency. We discuss potential implications of the findings for policies related to firm growth, technological advancement, and sustainability.

This paper examines the effects of a major social insurance reform program in Ethiopia on the skill-composition of workers and gross worker flows at the establishment level. The reform extended an existing pension and disability scheme, which covered the public sector through mandatory employer and employee contributions, to permanent employees of formal private sector establishments. Using a difference-in-differences framework on survey data from Ethiopian manufacturing establishments, we find a three-percentage point reduction in the share of high-skill workers in treatment establishments following the reform. The reform also resulted in a significant reduction in the worker separation rate in treatment establishments, largely explained by a decline in the quit rate among low-skill workers. This decline explains the composition effect and suggests a favorable perception of the reform's benefits among low-skill workers.

This paper provides evidence on whether the relationship between imported inputs and productivity in Ethiopia depends on foreign ownership. The study uses a nationally representative firm-level unbalanced panel dataset for the period 1996–2016. Methodologically, this paper adopts two complementary empirical approaches: the Gandhi, Navarro, and Rivers (2020; henceforth GNR) two-step approach for estimating the gross output production function and the system GMM approach for estimating the gross output production function. Our results indicate that the use of imported inputs enhances productivity among manufacturing firms with foreign ownership. For domestically owned firms, the effect of imported inputs is relatively small and marginally significant. We thus find evidence that foreign-owned firms have a premium in terms of productivity gains from the use of imported inputs, compared to domestically owned firms. Our results suggest that reducing trade barriers for imported inputs will benefit foreign-owned firms more than domestically owned firms.

This paper uses employer-employee data to jointly examine worker turnover and job flows in Ethiopia. We find substantial worker turnover (38%) at the aggregate level. Nearly half of this turnover is driven by establishment-level job flows, while the other half is accounted for by excess turnover or churning. A substantial part of hiring (separation) occurs among downsizing (growing) establishments, underscoring that worker flows are much higher than job reallocation across establishments. Churning of workers appears to be negatively associated with subsequent employment growth, and this relationship is stronger among employers that rely more on long-term relationships with workers.

This study evaluates the impact of a sector-specific industrial policy program on the performance of Ethiopian chemical manufacturing firms using a quasi-experimental design. The data for the study come from firm-level field surveys and administrative sources. To account for heterogeneity and selection bias due to observable and unobservable factors, we employ a range of empirical strategies, including quantile regression, propensity score matching (PSM), endogenous switching regression (ESR), and generalized propensity score (GPS) models. We also used alternative estimation methods that fit our data and sample size. Our findings show that the program has a positive and significant effect on productive capacity utilization of beneficiary firms, while there is no evidence of any impact on employment generation. The results show that the program’s beneficiary firms utilized an actual productive capacity of 4.5–7.6

We analyze the impact of a new storage technology and training on postharvest losses, sales and the timing of sales, farmgate prices, maize quality, and storage protection costs among small-scale maize farmers in rural Tanzania. The analysis is based on data collected by means of a randomized controlled trial in which farmers were randomized into one of three groups: a control group and two treatment groups. Farmers in the first treatment group received training on postharvest management practices, and farmers in the second treatment group were provided with hermetic (airtight) bags for storing maize as well as the training administered to the first treatment group. Both interventions had a significant effect in reducing storage losses, and the intervention with hermetic bags improved the quality of maize grain, raised the likelihood of selling maize, increased the farmgate price of maize, enabled farmers to shift some of their sales to the lean season, and reduced the cost of storage protection. Both interventions are economically feasible.

This paper uses matched employer-employee data to examine the wage responses to a mandatory social insurance reform program in Ethiopia. By relying on firm-level differences in alternative pre-reform contributory schemes, we examine the extent to which employers shifted the cost of social insurance to workers in terms of lower wages. We find partial switching that varies by workers' employment history. Wages of recent hires by treatment firms show a decline proportional to the mandatory employer contribution rate. Wages of incumbent workers, however, continued to rise after the reform but at a slower rate relative to the control group. The post-reform reduction in wages is larger and significant for production workers and employees of low-wage industries. Treatment workers also experienced reductions in bonuses after the reform while their allowances remained intact.

Using a large administrate dataset covering the universe of phone calls and airtime transfers in a country over a four year period, we examine the pattern of adoption of airtime transfers over time. We start by documenting strong network effects: increased usage of the new airtime transfer service by social neighbors predicts a higher adoption probability. We then seek to narrow down the possible sources of these network effects by distinguishing between network externalities and social learning. Within social learning, we also seek to differentiate between learning about existence of the new product from learning about its quality or usefulness. We find robust evidence suggestive of social learning both for the existence and the quality of the product. In contrast, we find that network effects turn negative after first adoption, suggesting that airtime transfers are strategic substitutes among network neighbors.

This study combines evidence from interviews in seven countries with (i) government institutions responsible for attracting Foreign Direct Investment (FDI), (ii) 102 multinationals (MNEs), and (iii) 226 domestic firms linked to these foreign affiliates as suppliers, customers, or competitors, to identify whether relations between MNEs and domestic firms lead to direct transfers of knowledge/technology. We first document that there are relatively few linkages between MNEs and domestic firms in sub-Saharan Africa compared with Asia. However, when linkages are present in sub-Saharan Africa they raise the likelihood of direct knowledge/technology transfers from MNEs to domestic firms as compared to linked-in firms in Asia. Finally, we do not find that direct knowledge/technology transfers are more likely to occur through FDI than through trade. As such our results are not consistent with the view that tacit knowledge transfers are more likely to occur through localised linkages.

We use census panel data on Ethiopian manufacturing firms to analyze how enterprise clustering in local markets covaries with firm-level output prices and physical productivity. We find a negative and statistically significant relationship between the density of firms that produce a given product in a given location and the local price of that product. We also find a positive and statistically significant relationship between the density of firms that produce a given product in a location and the physical productivity of same-product firms in the location. These results are consistent with the notion that increased clustering of firms generates higher competitive pressure and positive externalities. Across firms that produce different products, we find no statistically significant relationship between enterprise clustering and firm-level output prices and productivity. We also find no clustering effects across towns. Our results suggest that while clustering can impact firm performance, the advantages are narrow in scope.

Over the last two decades the Ethiopian manufacturing sector has experienced rapid expansion in terms of the number of firms, sales, and employment. This chapter examines the performance of the manufacturing sector using aggregate data and firm-level panel data compiled by the Central Statistical Agency (CSA) of Ethiopia. The focus is on three dimensions of performance: productivity growth, the extent of export orientation, and the competitiveness of domestic firms in the global context. Manufacturing remains a relatively small sector in terms of contribution to GDP and employment, and it has yet to become export oriented even by African standards. In examining productivity growth, the analysis addresses within-firm productivity growth and its heterogeneity across firms, as well as the role of resource reallocation from less efficient firms to more efficient ones.

We hypothesize that research and development (R&D) is sensitive to cash flow fluctuations due to asymmetric information and agency problems in the credit market. We adopt a variant of the Q model for R&D investment using the value of the firm, physical capital and employment to capture firm fundamentals as proxies for investment opportunities. We add cash flow to this specification, and estimate the augmented model separately for R&D participation and spending decisions using data on Chinese industrial firms for the period 2001–2006. We find that R&D participation and spending are sensitive to cash flow fluctuations, conditional on firm fundamentals. We also find that the cash flow sensitivity of R&D varies across firms depending on ownership.

Background Thrombus aspiration is still being used in a substantial number of patients despite 2 large randomized clinical trials showing no favorable effect of routine thrombus aspiration during primary percutaneous coronary intervention in patients with ST‐segment–elevation myocardial infarction. The aim of this observational study was to evaluate the impact of thrombus aspiration on mortality, stent thrombosis, and stroke using all available data from the Swedish Coronary Angiography and Angioplasty Registry (SCAAR). Methods and Results We identified 42 829 consecutive patients registered in SCAAR between January 2005 and September 2014 who underwent percutaneous coronary intervention for ST‐segment–elevation myocardial infarction. Thrombus aspiration was used in 25% of the procedures. We used instrumental variable analysis with administrative healthcare region as the treatment‐preference instrumental variable to evaluate the effect of thrombus aspiration on mortality, stent thrombosis, and stroke. Thrombus aspiration was not associated with mortality at 30 days (risk reduction: −1.2; 95% confidence interval [CI], −5.4 to 3.0; P =0.57) and 1 year (risk reduction: −2.4; 95% CI, −7.6 to 3.0; P =0.37). Thrombus aspiration was associated with a lower risk of stent thrombosis both at 30 days (risk reduction: −2.7; 95% CI, −4.1 to −1.4; P <0.001) and 1 year (risk reduction: −3.5; 95% CI, −5.3 to −1.7; P <0.001). In‐hospital stroke and neurologic complications did not differ between groups (risk reduction: 0.1; 95% CI, −0.8 to 1.1; P =0.76). Conclusions Mortality was not different between the groups. Thrombus aspiration was associated with decreased risk of stent thrombosis. Our study provides important evidence for the external validity of previous randomized studies regarding mortality.

GLM|LIC Working Paper No. 45 | April 2019 Wage Growth and Social Security Reform This paper uses worker-level panel data to examine the wage-shifting effects of a social security reform in Ethiopia. By relying on differences across firms in the existence of pre-reform provident funds, voluntary schemes that provide lump sum payouts to workers upon separation, we test whether employers have shifted to workers’ wages the cost of social security contributions. We find no evidence of such shifting as wages continued to rise significantly after the reform. However, we find that wage growth was substantially slower among employees of firms without provident funds after controlling for standard wage determinants. We also find that this reduction in wage growth affected only less-educated workers with no effect on moreeducated workers. The paper also shows rising wage inequality at the lower-end of the distribution driven primarily by rising lower-tail inequality among employees of firms without provident funds. JEL Classification: J23, J26, J30, O14

This paper examines the labor market implications of a mandatory social insurance scheme introduced in Ethiopia in 2011 for private sector employees in the formal sector. We use firm-level panel data and exploit differences in pre-reform pension plans across firms to identify the effects of the reform. We find no evidence of employers fully shifting the cost of pension benefits to workers in the form of lower wages. In fact the reform seems to be associated with an increase in real wage rates particularly among large firms. Firm-level employment declined after the reform with a greater contraction among firms without pre-reform provident funds and firms that were initially small. The composition of the workforce also shifted in favor of skilled workers although this effect may not be attributed entirely to the pension reform. We also find an increase in firm-level investment, capital per worker, and labor productivity.

A difference/system generalized method of moments (GMM) model that imposes time-constant coefficients is common in empirical studies using panel data. However, a rejection by the Sargan-Hansen test is sometimes a serious concern for researchers. We highlight the fact that the Sargan-Hansen test for GMM estimators applied to panel data is a joint test of valid orthogonality conditions and coefficient stability over time. A possible reason for a rejection is therefore that the slope coefficients vary over time. One solution is to estimate an empirical model in which the coefficients are time specific. We apply this solution to the system GMM estimator of simple nondynamic Cobb-Douglas production functions for a selection of Swedish industries and find that relaxing the assumption of constant slope coefficients results in more satisfactory outcomes of the Sargan-Hansen test.