Determinants of firm exit and growth in the food processing sector: Evidence from Ghana

We explore the determinants of firm exit and growth in the food processing sector using nationally-representative data for 745 firms in Ghana. In our sample, 168 of the firms exited the sector during the period 2014-2017. Firms were more likely to exit if they were in a rural district, were younger, and were involved in grain milling, but there was little impact of firm size on the likelihood of exit. In terms of firm growth, we find that tax registration, combined with registration with the national food regulator, had positive impacts on firm growth, while tax registration alone has a weaker effect. Therefore, for the food processing sector, efforts to promote formalization of firms for tax purposes would yield greater benefits if firms are also encouraged to undergo regulatory inspections and certification. Acknowledgement : The authors acknowledge the United States Agency for International Development (USAID) for its support for this study under the Ghana Strategy Support Program (GSSP). This work was undertaken as part of the CGIAR Research Program on Policies, Institutions, and Markets (PIM), which is led by the International Food Policy Research Institute (IFPRI) and funded by CGIAR Fund donors. The paper has not gone through IFPRI s standard peer-review procedure. The opinions expressed here belong to the authors and do not necessarily reflect those of PIM, IFPRI, CGIAR, or USAID.

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O17; O14

 Record created 2018-10-02, last modified 2020-10-28

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