The Illustrative Understanding on the Informal Sector and Its Influence in Firm Productivity in Sub-Saharan Africa (SSA): Evidence from Cameroon

Abstract

As globalization continues, textiles and clothing firms have many opportunities around the world. Using survey data, we evaluate the determinativeness of the informal sector and its impact on firm productivity by applying the Hicks–Moorsteen index and Data Employment Analysis (DEA) methods. Specifically, this study estimates factors driving total factor productivity (TFP) and its constituents for Cameroon’s companies from 2005 to 2014. As a result, the input levels of informal textile companies are the significant drivers of TFP with a mean in productivity of 47.06% for textile and 56.69% for clothing (I). Regarding formal textile companies, technical efficiency and technological progress fluctuate throughout the period of study (II). Firm size, technology adoption and primary resources (raw material) are important stages of a firm’s decision to innovate (III). Therefore, employing this approach could be reliable in analyzing firm productivity in other SSA countries.