Impact of business environment on investment and output of manufacturing firms in Senegal

This paper deals with the impact of poor business environment on Total Factor Productivity (TFP), output and investment of manufacturing firms in Senegal. A benchmark study coupled with results from the World Bank Enterprise Survey narrowed down the list of relevant constraints to doing business in Senegal. As a result, a Real Business Cycle model in a Small Open Economy is used to measure the impact of crime, corruption, power interruptions, poor infrastructures, and tax burden and regulations. Results show that poor business environment has sizeable negative impact on output and investment which is a common feature of recent studies. Solving those problems would lead to both investment and output increasing respectively by 94% and 79%.