The Effects of Pollution and Business Environment on Firm Productivity in Africa

In this article, we explore the links between city competitiveness and air pollution and business environment. Because competitive cities not only attract more productive firms but also facilitate their business, we choose to look at firm performance as a proxy for city competitiveness. We particularly focus on African firms because this region is developing fast, experiencing increasing pollution levels and the effects of agglomeration economies. We find two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.

Automated summary

The article explores the links between city competitiveness, air pollution, and business environment, focusing on African firms. The findings suggest that air pollution has negative effects on firm performance even at lower levels and the effects of agglomeration are stronger in this region compared to others. This highlights the importance of addressing pollution issues in fast-growing African cities.