Geographical Orientation of Export in Manufacturing Sector in Sub-Sahara Africa

Abstract

This paper analyses firm’s decision to export and the geographical orientation of manufacturing firms in selected countries in Sub-Saharan Africa. It uses a dataset collected by Rankin, Söderbom, and Teal (2006) on manufacturing firms in Kenya, Ghana, Tanzania Nigeria and South Africa over the period 1991–2004. The paper develops a multinomial choice model of export destination in which profit maximizing firms choose between selling only on domestic market, export only to another African country, and export only outside Africa or export to both destinations. The model is estimated using a multinomial logistic regression. The paper finds evidence of a positive effect of firm size and firm efficiency on export decision and its geographical orientation, especially for the decision to export outside Africa. There is also significant industry, country and time effects in explaining export orientation. Unlike many previous studies, this paper finds that foreign ownership does not substantially determine firm decision to export. Using non-parametric regression, the paper finds that there is a lot of heterogeneity in the relation between the explanatory variables and the propensity to export or to export to various geographical destinations.