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The Determinants of Firm Location in Tanzania / Javier Sanchez-Reaza.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Sanchez-Reaza, Javier.
- Series:
- Other papers.
- World Bank e-Library.
- Other papers
- Language:
- English
- Subjects (All):
- Economic geography.
- Global value chains and business clustering.
- Labor markets.
- Macroeconomics and economic growth.
- Private sector development.
- Private sector economics.
- Social protections and labor.
- Urban development.
- Urban economics.
- Urbanization.
- Local Subjects:
- Economic geography.
- Global value chains and business clustering.
- Labor markets.
- Macroeconomics and economic growth.
- Private sector development.
- Private sector economics.
- Social protections and labor.
- Urban development.
- Urban economics.
- Urbanization.
- Place of Publication:
- Washington, D.C. : The World Bank, 2018.
- System Details:
- data file
- Summary:
- This paper identifies the factors that affect the location of firms in Tanzania. Using a binomialeconometric strategy to address data gaps in firm location at the ward level, the paper groups factors into firm characteristics, market features, and two types of agglomeration economies that capture economies of scale external to the firm. The benefits of agglomeration may stem from specialization within and among firms (referred to in the literature as localization economies) or from diversification across firms (referred to as urbanization economies). The distinction between these two lies at the heart of the discussion on firm location. Regression results indicate that, of the various factors tested, the most important determinant driving firm location is the jobs diversification aspect of urban economies. Other contributing factors are localization economies (jobs specialization), competitive markets, and market access. Based on these findings, policymakers seeking to foster agglomeration could orient policies toward promoting firm entry within cities, complementary investments in urban infrastructure and the urban pool of labor, regulations that support competition, and improvements in market access for large cities. But localization economies are also significant in Tanzania, and could be encouraged through investment in smaller population centers and increasing competition and market access beyond the primary urban centers of Dar-es-Salaam and Arusha.
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