Technology gap, imported capital goods and productivity of manufacturing plants in sub-Saharan Africa
Eugene B. Nyantakyi and Jonathan Munemo
This paper uses firm and industry level data from Ghana, Tanzania and Kenya to examine the effect of capital goods import on domestic firms' productivity, and the role firms' technology gap plays in aiding the transmission of knowledge embodied in capital goods to domestic firms. Our results show that increasing imports of capital goods and closing technology gap have significant positive effect on productivity. Further, domestic firms with technology standards further from the international frontier benefit more from capital goods import. From a policy standpoint, the results suggest that eliminating tariffs on capital goods will improve the performance of technically incompetent firms in the manufacturing sector in the SSA region.