At roughly 4 percent per year, labor productivity in Tanzania has grown more rapidly over the past 14 years than at any other time in recent history. Employment growth has also been strong, keeping up with population growth at roughly 2.5 percent per year; the bulk of employment growth (90 percent) has been in the nonagricultural sector. However, the vast majority of this nonagricultural employment growth has occurred in informal sector. Using Tanzania’s first nationally representative survey of micro-, small-, and medium-sized enterprises, this paper shows that firms in the informal sector contributed roughly half a percentage point to economywide labor productivity growth in Tanzania between 2002 and 2012. However, virtually all of the labor productivity growth contributed by informal firms came from a small subset of firms called the “in-between firms.” This paper considers attributes of the in-between firms that could be used for targeting financial and business services to firms with the potential to grow. This paper finds two salient characteristics of in-between firms that might lend themselves to targeting—their owners are more likely to keep written accounts and more likely to keep their savings in formal bank accounts.

Recent growth accelerations in Africa are characterized by increasing productivity in agriculture, a declining share of the labor force employed in agriculture and declining productivity in modern sectors such as manufacturing. To shed light on this puzzle, we disaggregate firms in the manufacturing sector by size using two newly created panels of manufacturing firms, one for Tanzania covering 2008-2016 and one for Ethiopia covering 1996-2017. Our analysis reveals a dichotomy between larger firms that exhibit superior productivity performance but do not expand employment much, and small firms that absorb employment but do not experience any productivity growth. We suggest the poor employment performance of large firms is related to use of capital-intensive techniques associated with global trends in technology.

Presenting a topical analysis of the challenges and achievements of enterprise, Enterprise and Economic Development in Africa examines contributions to economic development on the continent, as well as exploring implications for policy dimensions.

The COVID-19 pandemic struck the global economy after a decade that featured a broad-based slowdown in productivity growth. Global Productivity: Trends, Drivers, and Policies presents the first comprehensive analysis of the evolution and drivers of productivity growth, examines the effects of COVID-19 on productivity, and discusses a wide range of policies needed to rekindle productivity growth. The book also provides a far-reaching data set of multiple measures of productivity for up to 164 advanced economies and emerging market and developing economies, and it introduces a new sectoral database of productivity. The World Bank has created an extraordinary book on productivity, covering a large group of countries and using a wide variety of data sources. There is an emphasis on emerging and developing economies, whereas the prior literature has concentrated on developed economies. The book seeks to understand growth patterns and quantify the role of (among other things) the reallocation of factors, technological change, and the impact of natural disasters, including the COVID-19 pandemic. This book is must-reading for specialists in emerging economies but also provides deep insights for anyone interested in economic growth and productivity. Martin Neil Baily Senior Fellow, The Brookings Institution Former Chair, U.S. President’s Council of Economic Advisers This is an important book at a critical time. As the book notes, global productivity growth had already been slowing prior to the COVID-19 pandemic and collapses with the pandemic. If we want an effective recovery, we have to understand what was driving these long-run trends. The book presents a novel global approach to examining the levels, growth rates, and drivers of productivity growth. For anyone wanting to understand or influence productivity growth, this is an essential read. Nicholas Bloom William D. Eberle Professor of Economics, Stanford University The COVID-19 pandemic hit a global economy that was already struggling with an adverse pre-existing condition—slow productivity growth. This extraordinarily valuable and timely book brings considerable new evidence that shows the broad-based, long-standing nature of the slowdown. It is comprehensive, with an exceptional focus on emerging market and developing economies. Importantly, it shows how severe disasters (of which COVID-19 is just the latest) typically harm productivity. There are no silver bullets, but the book suggests sensible strategies to improve growth prospects. John Fernald Schroders Chaired Professor of European Competitiveness and Reform and Professor of Economics, INSEAD

A study prepared by the United Nations University World Institute for Development Economics Research (UNU-WIDER)

In the context of a growing population in an already densely populated area, agricultural yields will need to increase without putting additional stress on the environment. The adoption of modern inputs by smallholders is an important ingredient of agricultural transformation. In this study we explore plot-level, household-level, and institutional-level characteristics associated with agricultural technology adoption behavior among smallholder farmers. The aim is to uncover correlations that can guide the design of policies and incentives that are likely to increase adoption. We explicitly differentiate between fixed costs that are likely to affect the decision to use the technology and variable costs that are more relevant for the decision regarding use intensity. In addition, we examine how the importance of each of these characteristics differs with asset status. To do so, we use data from about 1,880 potato plots cultivated by 500 randomly selected potato growers in southwestern Uganda. We first categorize households into poorly endowed and well-endowed asset classes based on their access to productive assets. We then estimate double-hurdle models for take-up and use intensity of fertilizer for each group. The results show that the factors associated with the decision to use fertilizer are often different from those associated with the decision about how much fertilizer to use and that the characteristics correlated with fertilizer adoption differ between asset-poor and asset-rich farmers. For instance, asset-poor female-headed households are less likely to use fertilizer, but if they do, they use more of it than male-headed households. Our results also suggest fertilizer packaging and distribution are important factors in fertilizer adoption decisions due to their impact on costs related to both indivisibilities and uncertainty about the quality. We derive a range of policy recommendations.

As a result of recent political reforms, Myanmar has the opportunity to enact major policy changes to reinvigorate its agriculture sector. In this context, Myanmar’s rubber sector has the potential to become an even greater source of export earnings and rural household incomes, but there are major challenges related to low rubber productivity and poor rubber quality. Using data from the Mon State Rural Household Survey (MSRHS) conducted from May to June 2015, as well as qualitative data collected from rubber producer focus groups and other interviews with rubber producers, traders, and processors, this paper describes the cost structure of rubber production in Mon State. We then estimate smallholder production costs and the profitability of smallholder rubber production under various alternative yield and price scenarios. The results suggest that if the weaknesses hindering the profitability of the rubber sector are not addressed, the rubber sector will likely stagnate. Moreover, in the absence of a major increase in world prices (substantially above the 2000–2016 average), new rubber investments will not be profitable without major improvements in yield and quality. Further, increasing only yields or only quality, or only improving the institutional environment, will not result in positive returns on investment for smallholders; reforms are needed in all three areas. If these weaknesses are addressed, however, Myanmar’s new investments will be profitable and Myanmar could become an important rubber producer and exporter on the world stage.