Abstract
This study examined the influence of investment climate on technical efficiencies of industries in Nigeria. The study was conducted in two phases namely (i) an estimation of the technical efficiency (TE) was carried out and, (ii) differences in TE across firms were statistically related to indicators of investment climate and firm-level characteristics. The analyses made use of 2009 World Bank Enterprise survey data on Nigeria. The results showed that food industry was more labour intensive and less efficient than other industries in Nigeria. The importance of scale, export and firm ownership was evident from the significance of the variables in all the industries. The results point to the fact that firms in Nigeria can improve their productivity by learning from customers and by facing international competition. Investment climate difficulties had less effect on food industries than others. The sector could be a good starting point in the nation’s industrialization policy drive if available resources can be utilized optimally.
Highlights
In various developing nations, firm-level production, trade, and distribution are undergoing major resource control, land use reform and operation, business model and linkages with buyers and suppliers
In respect of the effects of investment climates, the results clearly shows that differences in firmlevel efficiencies across industries in Nigeria can be attributed to discrepancies in investment climate
This study examines the influence of investment climate on the total factor productivity (TFP) of food industries in Nigeria relative to other ones
Summary
Firm-level production, trade, and distribution are undergoing major resource control, land use reform and operation, business model and linkages with buyers and suppliers. This is essential in the reality of the consequences of globalization. Globalization and expanding international markets in many developing countries offer opportunities for their producers to compete in emerging national and international markets In this world of competition, producers from developing nations need to gain optimal control over production, trade and distribution in order to (i) operate in a cost-effective way and (ii) guarantee the quality and value added of their products (Dolan and Humphrey 2004). While improving the investment climate generally for all firms is beneficial, investment climate that is more favourable towards agri-food system than other sectors might be more reasonable for African countries for the following reasons: (i) regional African markets are becoming increasingly important source of demand transformation in technology, production, size of business, growth for food products, (ii) The continent already possess valuable experience, skills and technical knowhow in agribusiness and (iii) cost of doing agribusiness is relatively low compare to other firms since bulk of the rural population are producers of the primary products
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