Input delays, Firm Dynamics, and Misallocation in Sub-Saharan Africa

Abstract

We quantitatively analyze the macroeconomic consequences of border delays in Sub-Saharan Africa. Delays of imported intermediate inputs lower aggregate output because of factor misallocation and due to an inefficiently low number of firms that uses foreign inputs in production. Our model economy features heterogeneous firms that endogenously differ in the degree to which foreign inputs are used. The model is calibrated to micro-level data from Sub-Saharan Africa. Reducing border delays can increase aggregate output by up to 9.4%. The gains are mainly due to a reallocation of economic activity towards more productive firms.