What Matters to African Firms? The Relevance of Perceptions Data
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What Matters to African What Matters to African Firms?Firms?The Relevance of Perceptions DataThe Relevance of Perceptions Data
Michał Oleksowicz
16.12.2010
OutlineOutline
1. Subjective Survey Data
2. What Matters to African Firms
3. Concerns
4. Conclusions
1. Data1. Data
The importance of reliable data
Macroeconomic data
Subjective survey data ◦Easy available but rarely used by
economists◦What are the problems with this data?
1.1 1.1 Macroeconomic dataMacroeconomic dataComparison of three sets of
macroeconomic indexes: (export, import), (external, internal
debt), (private, public savings)IMF, Central Bank of Nigeria, World Bank,
UN
Differences:Data collection procedureDefinitions of macroeconomic variablesDifferent periodsDifferent currency
1.2 1.2 Macroeconomic dataMacroeconomic data
1.3 1.3 Survey data Survey data
Source: Improving the Quality of Data and Impact- Evaluation Studies in Developing Countiries, 2010
1.1.44 Problems with subjective Problems with subjective survey survey datadataOrdering of questions (people attempt to
provide consistent answers):„How happy are you with life in general?”„How often do you normally go out on a date?”
Question wording:„Do you think that United States should forbid public speeches against democracy?”„Do you think that United States should allow public speeches against democracy?”
1.1.55 Problems with subjective Problems with subjective survey survey data (cont)data (cont)Scale presented to people:
„How many hours of TV do you watch per day?”
Little mental effort of respondents(subject pick the first or last available
alternatives in a list)
Social nature of the surveyRespondents avoid looking bad in front
of the interviewer
1.6 1.6 Problems with subjective Problems with subjective survey survey data (cont)data (cont)Non Attitudes, Wrong Attitudes
◦Attitudes are unstable over time◦Respondents believe that they
should have an opinion◦Respondents may not understand
why they did what they did
1.7 1.7 Firm level Firm level characteristicscharacteristicsFirm’s benchmarks may differ by
country
Firm’s may not recognize the origin of their problem
Constraints bind firms simultaneously
Firm level characteristics may affect views on the severity of constraints
1.1.88 Implications ImplicationsMeasurement error
◦Mean of error term may not be zero◦Error term may be correlated with
observable and unobservable characteristics of individual
Subjective measures may be used as explanatory variables
Subjective measures can not be used as dependent variables
2.1 2.1 What Matters to African What Matters to African FirmsFirms26 countries
Three income groups: ◦Low income (per capita income <
400 $)◦Lower middle income (400 $ < per capita income < 2000
$)◦Upper middle income (per capita
income> 2000 $)
2.2 2.2 QuestionnaireQuestionnaire
Source: What Mattes to African Firms; The relevance of Perceptions Data 2007
2.3a Results, low income2.3a Results, low income(elemental constraints)(elemental constraints)
Source: What Mattes to African Firms; The relevance of Perceptions Data. 2007
2.3b Results, lower middle 2.3b Results, lower middle incomeincome (quality of (quality of governance)governance)
Source: What Mattes to African Firms; The relevance of Perceptions Data, 2007
2.3c Results, upper middle 2.3c Results, upper middle incomeincome (policy nature (policy nature problems)problems)
Source: What Mattes to African Firms; The relevance of Perceptions Data, 2007
3. 3. Correlation between firm Correlation between firm perception and external dataperception and external data
Source: What Mattes to African Firms; The relevance of Perceptions Data, 2007
3.1 Firm level 3.1 Firm level characteristics characteristics Do the responses at firm level
relate to more „objective” measures of business climate
Probit regression:
3.2 3.2 Firm level Firm level characterisicscharacterisicsResults:
◦ firm size does not drive the severity of concern about electricity
◦Corruption is a more concern to larger firms
◦Tax admission is a more serious problem to exporting firms
◦Domestic firms complain more about access to finance
3.3 3.3 Camels and Hippos ?Camels and Hippos ?Interviewing camels and hippos on
a desert. What the real problem is?
Similarly firms in countries with low financial depth should be self- selected and not see financial constraint as a severe. In other words, do the ability to adjust weakens the perception of constraint?
3.4 3.4 Camels and Hippos ? Camels and Hippos ? (cont)(cont)
Source: What Mattes to African Firms; The relevance of Perceptions Data, 2007
4. 4. ConclusionsConclusionsPerception data is usefullFirms are bounded by a group of constraints
subject to different income levels◦ Elemental constraints (electricity, access to
finance, macro instability, access to land)◦ Governance constraints (tax rates, tax
administration, corruption, crime)◦ Policy constraints (skilled workers, labor
regulations)Adapting to a problem does not mean that
the problem is no longer recognizedFirm level characteristics affect firms views
on the constraintsThere is a correlations between subjective
and objective measures
BibliographyBibliography Ariyo A.. 1996. Quality of macroeconomic data on
Afica: Nigeria as a case study
Bertrand M.,Mullainathan S.. 2001. Do Poeple Mean What They Say? Implications for Subjective Survey Data.
Gelb A., Ramachandran V., Shah M., Turner G.. 2007.What Mattes to African Firms; The relevance of Perceptions Data.