Exploring Multidimensional Fiscal Incentives and Firms’ Productivity in a Developing Country
- 108 Downloads
This chapter investigates the impact of fiscal incentives on firms’ productivity using Cameroonian firms as a case. We use data from the World Bank Enterprise Survey for over 300 firms to calculate the productivity of firms. The Enterprise Survey also contain unique measures of assessing firms’ beneficiary status from different categories of fiscal incentives, such as import duty exemption, profit tax exemption and export financing, which we then used the propensity score matching technique to compute the impact on productivity. Our results show a significant and positive impact of the productivity of firms that benefit from profit tax exemption and export financing. However, when considering import duty exemption, the significance of this variable was not consistent. The chapter thus provides support for the argument that the government’s involvement in the firm should be targeted at rewarding outputs and not supporting processes, and thus provides an essential element for an effective industrialisation strategy.
- Action Aid. (2014). Investment Incentives in Ghana: The Cost to Socio-Economic Development. Action Aid Ghana Report Feb-2014, Accra: Action Aid. Retrieved from http://www.actionaid.org/sites/files/actionaid/investment-tax_incentives_in_ghana_-_an_actionaid_research_report.pdf.
- Austin, P. C. (2011). An Introduction to Propensity Score Methods for Reducing the Effects of Confounding in Observational Studies, Multivariate Behavioural Research. London: Routledge.Google Scholar
- Barron, M. (2014). Econometric Tools 1: Non-parametric Methods. Available via https://www.ocf.berkeley.edu/~manuelb/week6/LectureNotes06.pdf. Accessed 1 Oct 2015.
- Biya, P. (2013). Law N° 2013/004 of 18 April 2013 to Lay Down Private Investment Incentives in the Republic of Cameroon. Turkish and Cameroonian Business Association. Available via http://turcaba.org/index_htm_files/new-incentive-laws-oninvestment-in-the-republic-of-cameroon.pdf. Accessed 1 Oct 2015.
- Bora, B. (2002). Investment Distortions and the International Policy Architecture. World Trade Organisation Working Paper, Geneva.Google Scholar
- Bureau of Economic and Business Affairs. (2013). 2013 Investment Climate Statement—Cameroon. Bureau of Economic and Business Affairs. Available via http://www.state.gov/e/eb/rls/othr/ics/2013/204615.htm. Accessed 1 Oct 2015.
- Caliendo, M., & Kopeinig, S. (2005). Some Practical Guidance for the Implementation of Propensity Score Matching. Institute for the Study of Labour (IZA). Available via ftp.iza.org/dp1588.pdf. Accessed 1 Sep 2015.
- Central Bank of Nigeria-CBN. (2013). Fiscal Incentives in Nigeria: Lessons of Experience. Abuja: Central Bank of Nigeria.Google Scholar
- Escribano, A., Guasch, J. L., & Pena, J. (2010). Assessing the Impact of Infrastructure Quality on Firm Productivity in Africa: Cross-Country Comparisons Based on Investment Climate Surveys from 1999 to 2005. World Bank. Available via https://openknowledge.worldbank.org/handle/10986/19901. Accessed 17 Jan 2017.
- IMF. (2012). Sub-Saharan Africa-Maintaining Growth in an Uncertain World. Washington, DC: IMF.Google Scholar
- McArthur, J., & Teal, F. (2002). Corruption and Firm Performance in Africa. CSAE working paper, WPS/2002.10, Oxford University.Google Scholar
- Nkhata, R., Jumbe, C., & Mwabumba, M. (2014). Does Irrigation Have an Impact on Food Security and Poverty? IFPRI. Available via http://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/128180. Accessed 17 Jan 2017.
- OECD. (2007). Tax Incentives for Investment—A Global Perspective: Experiences in MENA and Non-MENA Countries. OECD. Available via www.oecd.org/mena/competitiveness/38758855.pdf. Accessed 17 Jan 2017.
- Pufahl, A., & Weiss, C. R. (2008, August 26–19). Evaluating the Effects of Farm Programs: Results from Propensity Score Matching. Paper presented at the 12th Congress of the European Association of Agricultural Economists, Ghent, Belgium.Google Scholar
- Rosenbaum, P. R., & Rubin, D. B. (1985). Constructing a Control Group Using Multivariate Matched Sampling Methods that Incorporate the Propensity Score. The American Statistician, 39(1), 33–38.Google Scholar
- Tabi, A. (2005, February 15–16). Fiscal Policy and Sectoral Productivity Convergence in Cameroon: Implications for Poverty Reduction. Paper presented at the Washington Conference, IMF, Washington, DC.Google Scholar
- UNCTAD. (2000). Tax Incentives and Foreign Direct Investment: A Global Survey. Geneva and New York: UNCTAD.Google Scholar
- UNCTAD. (2004). Incentives: UNCTAD Series on Issues in International Investment Agreements. Geneva and New York: UNCTAD. Retrieved from https://unctad.org/en/Docs/iteiit20035_en.pdf.
- UNCTAD. (2015). Broadening the Sources of Growth in Africa: The Role of Investment. Geneva: UNCTAD.Google Scholar
- UNECA. (2013). Making the Most of Africa’s Commodities: Industrializing for Growth, Jobs, and Economic Transformation. Addis Ababa: United Nations Economic Commission for Africa.Google Scholar
- World Bank. (2015). World Development Indicators. Washington: World Bank.Google Scholar