Firms? Locational Choice and Infrastructure Development in Rwanda

28 Pages Posted: 20 Apr 2016

See all articles by Atsushi Iimi

Atsushi Iimi

International Monetary Fund (IMF); World Bank

Richard Martin Humphrey

World Bank - Sustainable Development Network

Sevara Melibaeva

World Bank - Sustainable Development Network

Date Written: May 29, 2015

Abstract

Agglomeration economies are among the most important factors to increase firm productivity. However, there is little evidence supportive of this in Africa. By applying the conditional and nested logit models, this paper examines the relationship between firm locations and infrastructure accessibility in Rwanda. It is found that agglomeration economies matter to even one of the smallest countries in Africa. It is also found that infrastructure availability has an important role in affecting the firm location decision. Electricity access and transport connectivity to the domestic and international markets are found to be important to attract new investment. In addition, the quality of local labor supplied, measured by educational attainment, is found as an important determinant of firm location, while the effect of labor costs remains inconclusive.

Keywords: Economic Geography, Transport Economics Policy & Planning

Suggested Citation

Iimi, Atsushi and Humphrey, Richard Martin and Melibaeva, Sevara, Firms? Locational Choice and Infrastructure Development in Rwanda (May 29, 2015). World Bank Policy Research Working Paper No. 7279. Available at SSRN: https://ssrn.com/abstract=2613168

Atsushi Iimi (Contact Author)

International Monetary Fund (IMF)

700 19th Street, N.W.
Washington, DC 20431
United States

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

Richard Martin Humphrey

World Bank - Sustainable Development Network

United States

Sevara Melibaeva

World Bank - Sustainable Development Network

United States

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