Firm Survival and Change in Ghana, 2003-2013

This paper explores the determinants of firm survival in Ghanaian manufacturing and the contributions of growth and selection to the evolution of the firm size distribution. For this analysis we created a two-wave panel spanning 10 years to study exit, growth and decline, by re-surveying 1000 firms randomly selected from the 2003 National Industrial Census. We find strong differences in exit patterns by region and firm size. Former owners and managers commonly cite personal circumstances as the reason for exit in the case of small firms and increasing costs in the case of large firms. We show that both growth and selection played only a small role in the evolution of the firm size distribution, contradicting earlier work on Ghana. Overall, the picture we paint of manufacturing in Ghana is not a positive one: total employment by firms operating before 2003 decreased from 134,863 in 2003 to 74,319 in 2013, although we cannot explore to what extent new employment in firms that entered after 2003-who were not surveyed-compensated for this decline.