Cross-country comparative analysis of SMEs' TFP in MENA region A firm-level assessment

Abstract

This paper analysis the determinants of productivity for SMEs for a select group of countries; the countries were chosen from a wide spectrum of development levels. Belgium, Poland, and Malta are from the “North” and Egypt, Morocco, and occupied Palestinian territory (oPt) are developing countries from “south”. The analysis of TFP shows that differences in productivity between SMEs and large firms depend on industry, and country. Indeed, whenever such differences exist, SMEs tend to be less productive than larger firms within the same industry. Furthermore, it also seems that differences in productivity also depend on the country’s characteristics. Further analysis showed that productivity differences depend on both the industry and the country. It is evident that SMEs in the South tend to exhibit lower levels of productivity irrespective of the industry, whereas in the North discrepancies in productivity can be either positive or negative depending on the industry. The analysis demonstrate that the following variables are significant in explaining productivity: the age of the firm, the share of exports in a firm’s output, the intensity of competition within an industry and the technological intensity within an industry. The paper concludes with recommendations of competition and capital access enhancement policies.