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The Effects of Pollution and Business Environment on Firm Productivity in Africa (English)

This paper explores the links between city competitiveness and air pollution and the business environment. Because competitive cities not only attract more productive firms, but also facilitate their business, the paper look at firm performance as a proxy for city competitiveness. It focuses on African firms, because this region is developing fast and experiencing increasing pollution levels and the effects of agglomeration economies. The analysis finds two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.


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    Soppelsa,Maria Edisa, Lozano Gracia,Nancy, Xu,L. Colin

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    Policy Research Working Paper

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  • Doc Name

    The Effects of Pollution and Business Environment on Firm Productivity in Africa

  • Keywords

    labor productivity growth; economic effects of climate change; good quality of life; early stage of development; access to bank loan; total factor productivity growth; effect of pollution; firm performance; employment growth; employment growth rate; access to finance; country fixed effect; firm productivity; business environment; exposure to pollution; pollution level; business environment constraints; types of firms; level of capacity; measure output; change in employment; effect on employment; air pollution measures; air pollution data; main urban center; standard of living; reduction in employment; remote sensing data; term of productivity; flexible labor market; negative effect; standard deviation; firm growth; concentration levels; city competitiveness; standard error; pollution effect; firm level; worker productivity; agglomeration economy; labor regulation; statistical significance; high-tech industry; firm survey; environmental regulation; firm location; foreign ownership; independent variable; productivity level; overdraft facility; human capital; summary statistic; trade credit; robustness check; competitive cities; informal sector; nitrogen dioxide; competitive city; geographic distribution; ground level; ownership share; replacement cost; tax burden; production function; informal competition; blood stream; health consequence; Employment Change; representative sample; mortality risk; Business Climate; plastic material; cross-country study; simple average; air filter; income workers; marginal effect; small cities; trade regulation; high employment; political institution; significant correlation; model specification; linear relationship; positive relationship; production level; negative correlation; pollution variable; small sample; annual sale; capital-labor ratio; population level; Population Density; skilled labor; tax rate; land acquisition; informal firms; power outage; export share; satellite data; collected information; firm size; productive worker; living standard; qualified worker; pollution control; annual deaths; city performance; pollution issues; positive growth; health effect; long-term growth; open access; development policy; pollution havens; political competition; bank finance; power supply; global economy; legal structure; public awareness; quantitative assessment; national gdp



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Soppelsa,Maria Edisa Lozano Gracia,Nancy Xu,L. Colin

The Effects of Pollution and Business Environment on Firm Productivity in Africa (English). Policy Research working paper,no. WPS 8834 Washington, D.C. : World Bank Group.