Technology and Productivity in African Manufacturing Firms

We find that heterogeneity in production functions is an important source of variation in firm outcomes in Africa, and we find it is more important than education or productivity in explaining differences in output per worker. There is some technological diversity within Africa, with more dependence on raw materials in poor countries and higher returns to education in richer countries. This suggests that parameter evolution is an important element of modeling the nature of technical change, and that development policy should consider technological change as a mechanism to increase growth as well as augmenting factor stocks or total factor productivity.