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Extent of Scale and Geographic Spread
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Morley, David - The Cambridge introduction to creative writing (2011) - libgen.li
| Extent of Scale and Geographic Spread Number of separate firms belonging to holding company or group enterprise Firm nationality Location of firms African Chinese Indian European Domestic 8 1 2 Other Africa 4 1 Outside Africa 16 Source World Bank staff. Note Data pertain to median values. 06-Chap6:06-Chap6 10/9/06 2:39 PM Page 315 316 AFRICA ’ S SILK ROAD : CHINA AND INDIA ’ S NEW ECONOMIC FRONTIER ket. The WBAATI business case studies focused on a large state-owned Chinese construction firm operating on the continent in Tanzania, Uganda, Kenya, and Zambia, doing so largely through competing for public procurement contracts in each of the four countries. Although the firm possesses the capacity to engage in construction contracts in other, neighboring countries on the continent, its management follows a business strategy dictated by headquarters in China the firm will operate only in its current four markets other construction firms belonging to the same holding group will bid on contracts in other African markets. All other things equal, the effect of such market segmentation is to reduce the extent of competition in Africa’s construction sector. A similar, but even more striking, pattern emerges in table 6.4 among the surveyed firms when the focus is on geographic diversification of the number of group-member firms in markets outside of Africa altogether. Again, and not surprisingly, given the relative nascence of their international corporate development, African businesses that are part of a group structure are much less extended to other continents than are their Chinese and Indian counterparts also operating in Africa. Impacts of Scale on Exports Based on the foregoing analysis of differences in scale of businesses operating in Africa as a starting point for assessing the nature of the investment- trade linkages exhibited by such firms, it is useful to gauge the extent to which firm size is related to overall export performance. The analysis then focuses on an assessment of the differences in export—and import— patterns at a more disaggregated level. Whether in terms of comparing (i) domestic sales versus exports, (ii) exports to regional markets within Africa versus exports to global markets, or (iii) exports to specific markets all wholly outside Africa, new empirical evidence from firm-level survey data on such businesses suggests that firm size and export propensity—measured by exports as a percentage of total sales revenue—are positively related, all other things equal see figures 6.7a–6.7c. In the first case, the data indicate that while, within either of the two size classes—micro, small, and medium or large and very large 30 — domestic sales exceed exports, on average, larger firms exhibit greater export propensity than do smaller firms. In comparing the propensity to export regionally (that is, within Africa) versus the propensity to export globally, smaller firms export more to 06-Chap6:06-Chap6 10/9/06 2:39 PM Page 316 INVESTMENT - TRADE LINKAGES IN AFRICAN - ASIAN COMMERCE 317 regional markets than they export outside the continent, consistent with the findings on domestic sales versus exports above. The larger firms not only export more than smaller firms to regional markets but also to international markets in fact, the data suggest that larger firms export to regional and global markets with about the same intensity. Finally, in comparing the propensity to export to different international markets—whether China and India, Europe and North America, or the rest of the world—larger firms register more exports per unit of sales than their smaller counterparts. FIGURE 6.7 Download 5.17 Mb. Share with your friends:
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