Which Firms Die? A Look at Manufacturing Firm Exit in Ghana

In the context of Africa, which firms are driven out of business? Given that many markets do not function efficiently in Africa, the determinants of firm exit may not be the same fundamentals that force business closure elsewhere. In particular, less productive firms may not be the ones forced out of business. This article examines the determinants of manufacturing firm exit in the context of Ghana, with particular attention paid to productivity (or lack thereof) as a potential determinant of exit. Three different methods are used to measure productivity, two of which carefully handle the issue of simultaneity in production function estimation. In addition, other determinants of firm exit are examined and compared to previous results in the literature.