Agglomeration Economies and Firms’ Performance: Assessment on Ivorian Enterprises

Abstract

Exposed for competing firms in the same industry or not, within the same area, has been shown to improve the efficiency of firms, on average. In this study, we assess whether agglomeration economies have a significant influence on firms' productivity in Cote d'Ivoire. Considering urbanization and localization economies variables, we use an estimation methodology relied on a two-step procedure. We find evidence of the existence of agglomeration externalities in Cote d'Ivoire by using the two-step procedure. After controlling for firm's age and legal status, we show that localization economies have a positive influence on firms' productivity in general. In contrast, urbanization variables have a mixed impact. When we consider differentiation among sectors, firms engaged in services seem to benefit more from agglomeration economies in Cote d'Ivoire.